Corporate Governance,Bond Rating And Bond Yields

The Financial Crisis Inquiry Commission(FCIC) pointed out that the root cause of the subprime crisis is the failure of corporate governance in financial institution. To the world economy, the perfect corporate governance is as important as the national governance. Thus, this dissertation aims to answer the following two questions: Whether the corporate governance is one of the mechanisms of bond rating impact on bond yields? Taking into account the diversification of the property right in China, whether the property right will affect the relationship among corporate governance, bond rating and bond yields? This dissertation selects the latest listing Corporation data and uses the method of empirical analysis to draw the conclusions.This dissertation adopts the method of theoretical analysis and empirical analysis to confirm the hypothesis.First of all, describe the current situation and development of China’s bond market and bond rating industry. Then, based on the theoretical analysis of the agency problem and information asymmetry, this paper proposes the hypothesis. Finally, hypothesis are tested with the data of corporate bonds issued by listed company in Shanghai and Shenzhen A stock market from year 2007 to 2014, the results show that: Firstly, corporate governance can enhance the relationship between bond rating and bond yields; Second,compared to state-owned enterprises,the impact of corporate governance to the negative correlation between bond rating and bond yields is more significant in private enterprise.This dissertation has the following meanings.In the theoretical sense, this study not only enriches the research of corporate governance, but also confirms the influence of bond rating in bond market, supports the view that bond rating is recognized by public; in the practical sense,this study not only provides suggestions to improve the governance structure and reduce the cost of bond financing, but also prevents the bond default risk and reduce the bond market information asymmetry.