An Empirical Study On The Influence Factors Of Financing Cost About Chinese Corporate Bond

Since “the 07 bond of Yangtze Power” listed in The Shanghai Stock Exchange, corporate bond market of China has been developing for eight years.Corporate bonds attract a large number of enterprises and investors, becoming an essential part of the capital market. The issue of corporate bonds explores the financing channel,ameliorates the high dependence on bank loans in the debt financing, and changes the behavior of our enterprises which are keen on equity financing, serving as a complement to “the short board” of our capital market.Increasing the proportion of corporate bonds in the direct financing market is the long-term strategic goal of China capital market. The level of corporate bond financing cost, which is a critical problem of the corporate bond market, not only relates to the operating efficiency of the corporate bond market, also affects the allocation efficiency of capital market. The book-building is the method to determine the coupon rate of primary market. The cost of corporate bond is mainly reflected in the price of corporate bonds. The object of book-building consists of shareholders and net investment institutions. Then, what are the factors of shareholders and institutional investors concerning about the cost of the corporate bond? That is to say, for issuers, what are the influence factors of the corporate bond cost? Therefore,all participants, including bond investors, issuers and market regulators, pay close attention to the cost study of corporate bonds financing influential factors. It is worth researching the influence factors of financing cost about Chinese corporate bond.In this paper, the research sample is all the 495 public issuance corporate bonds during the period between 2007 to 2014 in Shanghai and Shenzhen Stock Exchanges. The paper analyses the status quo of the development of Chinese corporate bonds. On basic of asymmetric information theory, agency cost theory and signaling theory, this paper puts forward the hypothesis to do empirical testing and results analysis. In determining the cost of corporate bond financing, this paper uses the difference between the coupon rate and the treasury security to deduct the impact of interest rate from macroeconomic factors. This paper mainly discusses the impact of micro-situation on financing cost in primary market. Through the study, we find that there is significant correlation between the state of property rights, the size of company, financial leverage ratio and bond credit rating with the financing cost. The result proves that financial leverage ratio makes a positive significant influence, the size of company and bond credit rating make a negative correlation, while profitability are not concerned significantly. These studies can increase the efficiency of book-building for corporate bonds, reduce the financing cost of the corporate bond and improve the investment efficiency of investors.Finally, on the basis of the conclusion and the current situation of the corporate bond market in China, this paper puts forward some recommendations for the corporate bond market to reduce the financing cost of the corporate bond. Such as simplifying the issuance process, eliminating the influence of state-owned enterprises, determining a reasonable level of external financing and developing the bond rating market positively.