Underwriter Certification And The Cost Of Common Corporate Bond

With the improvement of marketization,underwriters have played a more important role in the bond market.In order to explore the influence of underwriters on bond pricing,this paper builds a theoretical analysis framework on the relationship between underwriters and bond spreads based on the certification theory,and selects the general corporate bonds issued on the Shanghai and Shenzhen Stock Exchanges from 2015 to 2019 as a research sample to conduct empirical research.This article describes the underwriter's reputation factors from the two dimensions of the classification results of securities companies and the underwriting market share,and chooses the local underwriter variable to explain the influence of underwriters on bond pricing fully.Additionally,this article also studies the implicit guarantee of governments' impact on the underwriter certification mechanism.Through descriptive statistics,correlation studies,and regression modeling,the following conclusions are reached:Firstly,the higher the underwriter's reputation is,the less the financing of bond costs.Local underwriters are more effective than non-local underwriters on reducing the cost of bond.Secondly,bonds issued by local government platforms and state-owned enterprises have lower financing costs because there is the implicit guarantee of governments for city bonds and state-owned bonds.In addition,the implicit guarantee of governments restrains the underwriter's reputation mechanism,but it has different effects on the two dimensions of securities company classification results and the underwriting market share.The implicit guarantee of governments makes the underwriter's reputation mechanism have no effect on reducing bond financing costs,but the local underwriter variable still plays a significant role in bond pricing.The discoveries of this article demonstrate the role of underwriter certification in reducing the cost of bond.However,government intervention will affect the autonomous competition of economic entities in the bond market,so that the underwriter's reputation mechanism will be partially ineffective,which provides some inspiration for how to promote the bond market developing healthily.