Reputation Of Underwriter,Implicit Guarantee Of Government And Bond Pricing

In recent years,under the guidance of the country’s policy by encouraging to increase the proportion of direct financing and develop the bond market actively,with the economic keeping falling to the bottom and interest rates continuing to decline,the bond financing has gradually become one of the main means of financing.China’s corporate bond market has exploded and ushered in a strategic opportunity period since China Securities Regulatory Commission announced and applied "Regulation for the Issuance and Trading of Corporate Bond" on January 15,2015.The price of bond issuance is related to the financing cost of enterprise directly,and affecting the optimal allocation of resources.In consideration of this,this paper from the perspectives of the informal institutional firstly,builds the theoretical framework about the reputation of underwriter and the implicit guarantee of government,and empirically analyzes the impact on bond pricing by reputation of underwriter and implicit guarantee of government based on corporate bond cross-section data of Shanghai and Shenzhen Stock Exchange in 2012-2016.In addition,this paper introduces the degree of marketization to conduct a synergistic effect.Considering the influence of "Corporate Bond New Policy",this paper discusses the heterogeneity characteristics of the impact on bond pricing by reputation of underwriter and implicit guarantee of government by using four groups of samples.The main findings of this paper are as follows:Firstly,the reputation of underwriter is negatively correlated with the bond issuance spread,which verifies the existence of reputation mechanism of underwriter in China’s bond field.In the classification studies,the return coefficient of reputation of underwriter in public offering and private placement,listed companies and non-listed companies samples are significantly negative,so the degree of asymmetry of the issuer and the bond itself has no effect on reputation mechanism of underwriter;but the regression coefficients of reputation of underwriter in the samples which are in the Shenzhen Stock Exchange and after "Corporate Bond New Policy" are not significant,so the exchange market and the "new policy of corporate bond" play a heterogeneous impact on reputation mechanism of underwriter.Secondly,implicit guarantee of government has a significant negative effect on bond pricing,effectively reducing the cost of bond financing of state-owned enterprises.The classification studies find that the implicit guarantee of government does not have the heterogeneous effect on the bond pricing due to the breakdown of the sample.Thirdly,the degree of marketization has a significant negative effect on bond pricing,and the synergies effect with reputation of underwriter,that is,the higher the degree of marketization,the greater impact of reputation of underwriter on bond pricing;the degree of marketization and implicit guarantee of government oppose each other,that is,the lower the degree of marketization,the stronger impact on bond pricing by government implicit guarantee.Based on the above research,this paper puts forward two suggestions:Firstly,to advise and support the strict supervision of the regulatory authorities,propose higher requirements for the legality and compliance of underwriter’s bond underwriting,implement structured mechanism of reward and punishment,establish "Underwriter Business Reputation Evaluation System" as soon as possible,and announce timely the matters of underwriter’s illegal behavior or bond default by its underwriting.Encourage provinces(municipalities and autonomous regions)to moderately enhance the degree of market competition among intermediaries in the region,eliminate local protectionism of regional brokers,and cultivate the free and effective market of reputation mechanism of underwriters.Secondly,it is suggested that the local government should not interfere in the financing behavior of the state-owned enterprises so that the enterprises can operate independently and market-oriented,and create a market environment for survival and fair financing,stimulate the vitality of the private economy and play a decisive role in the allocation of resources.For investors,it need properly guide them to form a correct,objective and market-oriented investment philosophy,and gradually treat financing behavior by state-owned and private enterprises equally.