Media Coverage, Progress Of Marketization And The Cost Of Corporate Bonds

In 2007,China issued the first corporate bond.Since then,this new form of financing had officially entered the country's vision.In January 2015,the China Securities Regulatory Commission issued the "Administrative Measures on the Issuance and Transaction of Corporate Bonds",which created a good opportunity for the development of corporate bonds,as well as marked a new period of development for the corporate bond market.Thanks to decades of unremitting efforts,China had built a relatively perfect corporate bond market.In recent years,China has promulgated a large number of rules and regulations to expedite the development of the bond market and raise the proportion of direct financing.Under the background of the slower economic growth and the deepening of interest rate marketization reform activities,issuing corporate bonds had become an important way of financing for many enterprises.The level of corporate financing costs affected the optimal allocation of resources and the future development of the company.However,the existence of information asymmetry had caused enterprises to remain deeply trapped in financing difficulties.As the carrier of information,the media can play a role in spreading public information and expanding public opinion.The media,as a "fourth party power" independent of "legislative,judicial,and administrative",has an important mission of conveying information and monitoring the market.It can not only transmit corporate information as an information mediator,but also can act as a supervisor to disclose corporate scandals,exerting supervision and management of the media(Dyck,2002).It plays an important role in reducing information asymmetry,improving corporate governance,and protecting the interests of investors.The process of marketization can affect the decision and behavior of the market participants,and constitutes the external constraint environment of the participants in the market.It is closely related to the changes in economy,politics,culture,society,law,and ideas.It is a comprehensive display of the institutional environment during the transition period of various undertakings in our country(Fan Gang et al.,2011).The news media is a part of the institutional environment.It not only can affect the behavior of other market players,but also be constrained by the institutional environment(Ran Dongming and He Guan,2014).In the capital market,the news media,as an external force independent of listed companies,on the one hand,mitigates information asymmetry by leveraging its information dissemination and information mining capabilities.At the same time,it can influence the behavior of listed companies through monitoring mechanisms and reputation mechanisms.(Dyck,2002).On the other hand,the function of the information is also constrained by the macro institutional environment(Chen Hong et.al.,2014),especially the impact of the marketization process.Therefore,it is necessary to study the relationship among media attention,marketization process,and corporate bond financing costs.At present,most scholars have studied the influence of internal factors on the bond market such as earnings management,internal control quality,and financial characteristics in the bond market.From the perspective of external governance mechanisms,there were few studies on the impact of external factors on the financing costs of corporate bonds.In view of this,this article focused on two types of external governance mechanisms,namely,media coverage and marketization,the 1215 corporate bonds publicly issued by Shenzhen and Shanghai from 2013 to 2016 were used as research objects.Using the number of media reports,the index of marketization progress,and other financial data,an empirical study was conducted on the correlation among media coverage,marketization,and corporate bond financing costs.Firstly,descriptive statistics and Pearson correlation analysis were conducted with SPSS22.0.After that,the linear regression model was used to study the relationship between media attention and corporate bond financing costs,and the relationship between marketization process and corporate bond financing costs.Whether there was a difference in the influence of media attention on the financing costs of corporate bonds.Finally,related robustness tests were performed.The results of the study show that: 1.the media attention has a significant positive impact on the financing costs of corporate bonds.That is,the more media companies report,the lower the cost of bond financing will be.2.The degree of marketization is negatively related to the cost of corporate bond financing,that is,the higher the degree of marketization,the lower cost the company needs to pay for bond financing.3.In different areas of marketization,there are differences in the influence of media attention on the financing costs of corporate bonds.Finally,this paper presents relevant recommendations based on theoretical analysis and empirical results.