The Effect Of Underwriter Reputation On Corporate Bond Financing Cost

Since the reform and opening up began in 1978,the financing methods of Chinese enterprises have been continuously enriched.As an important form of direct financing,bond financing,in the form of financing through the issuance of bonds,is gradually accepted by enterprises and society,and they are continuously developing.Bond financing has become one of the most important ways for corporate finance in the socialist market economy,and it has been highly valued by the government and all walks of life.The promulgation of the "2007 Corporate Bond Issuance Pilot Measures" marks the advent of the new bond variety.In addition,interbank products such as bills and short-term financing have also been launched one after another,continuously enriching companies' financing channels.And more financing products have given companies more financing options,enabling them to choose the most favorable among different types of financing.For most of the enterprises in our country,whether from the issuance size or quantity,corporate bonds occupy the most important part.Therefore,it is of theoretical and practical significance to analyze the impact of corporate bond financing costs.The existence of information asymmetry makes investors more disadvantaged than the issuer,which hinders investors from making reasonable value judgments for the issuer.Although the law stipulates that companies need to disclose relevant information,due to the existence of egoism,publishers often disclose information that is beneficial to themselves.As a result,various intermediaries that connect publishers and investors serve different roles as messengers.Among them,as the most important intermediary organization,whether the underwriter's endorsement of financing companies can be recognized by investors has an important impact on the issuer's financing costs.Related research shows that,whether it is domestic or foreign stock markets,the reputation of underwriters has a significant impact on the IPO underpricing of companies.As one of the important approaches to direct financing,whether the reputation of the underwriter have significant impact on the bond financing process is worth exploring.This paper takes the theory of capital structure,information asymmetry,and signal transmission as the theoretical basis,and uses the 1,315 corporate bonds issued on the Stock Exchanges from 2007 to 2015 as research samples,analyzing through a combination of theoretical and empirical methods.For the core research variable underwriter's reputation in the article,borrowed from existing research methods and added dummy variables,with a weighted result of market share and market share of underwriting amount of corporate bonds underwritten by each underwriter from 2007 to 2015.And whether the underwriter is a measure of state-owned enterprises,measuring the reputation of underwriters in corporate bond issuance from two dimensions.Through analysis,we found that underwriter reputation and bond financing costs have a significant negative correlation,that is,higher reputation underwriters can significantly reduce the bond financing costs.High reputation underwriters have more advantages than low reputation underwriters,which helps investors recognize the underwriting bonds and the bond risks of default are lower,which in turn reduces bond financing costs.Finally,this article explains the innovations and deficiencies of the article and provides some suggestions for future research.