Local Government Financial Disclosure Quality And The Pricing Of Government Bonds

As an important financing channel for local governments and an important financial product in the capital market,local government bonds are playing an increasingly important role in both the local government and the capital market.However,with the continuous debts borrowing of local governments in China,related debt risks and debt financing costs are also accumulating.Therefore,it is necessary to explore the factors affecting the pricing of local government bonds.Scholars have explored the factors influencing the pricing of government bonds from the aspects of credit rating,local government financial status,information disclosure and external macro environment such as policy and finance.However,due to the late government accounting reform in China and the late start of the development of local government bonds,few scholars in China have explored the influence of government financial information disclosure on the pricing of local government bonds,and the ways that scholars measuring the the quality of government financial disclosure are almost the same.Therefore,this thesis uses the quality of local government financial disclosure as an entry point to study its impact on the pricing of government bond issuance,and empirically tests the moderating effect of fiscal decentralization,as an element of the differences of bond issuers,and digital finance,as an element of external market environment,on the above relationship.This thesis mainly adopts the methods of literature research and empirical research to explore the impact of the quality of local government financial disclosure on the pricing of government bonds.First of all,based on the existing literature conclusions,this thesis holds that the financial disclosure of local governments may affect the pricing of government bonds by reducing information asymmetry and playing a role of government governance.The disclosure of high quality financial information can reduce the information asymmetry and uncertainty faced by government bond investors and improve their monitoring efficiency,which help government bond investors make investment decisions.At the same time,the monitoring pressure caused by disclosing high quality financial information can play a certain government governance effect and restrain the behavior of local governments,which helps improve the efficiency of the use of government financial funds or debt funds and make the flow of government funds more in line with the interests of government bond investors.Therefore,the disclosure of local government financial information reduces the debt risk through the above two paths,thus helping to reduce the pricing of government bond issuance.Secondly,considering that fiscal decentralization and digital finance may play a role in government governance and reduce information asymmetry respectively,thus affecting the relationship between the quality of the financial disclosure of local governments and the pricing of bond issuance,this thesis further examines the moderating effect of fiscal decentralization and digital finance.This thesis takes the government bonds issued by 30 provincial governments in China from 2016 to 2020 as the research object,and conducts multiple regression analysis and robustness test by designing fixed effect regression models,and empirically tests the impact of the quality of local government financial disclosure on the pricing of government bonds.Considering that almost all the scholars of the existing related study used provincial fiscal transparency score of Shanghai University of Finance and Economics to measure the quality of government finance disclosure,and the way they measuring the quality of government finance disclosure is too single,so this thesis constructed a brand new measurement index of the quality of provincial local government financial disclosure through reference to The Blue Book of the Government Financial Information Disclosure of Zhongnan University of Economics and Law(2015),and used it for empirical test.Through empirical research,this thesis mainly draws the following conclusions:(1)the quality of local government financial information disclosure significantly negatively affects the pricing of government bonds;(2)both fiscal decentralization and digital finance can weaken the negative correlation between the quality of local government financial disclosure and the pricing of government bond issuance.The research of this thesis provides empirical evidence that the improvement of the quality of local government financial information disclosure can effectively reduce the pricing of government bonds,and provides decision-making reference for reducing the financing cost of local government debt and preventing debt risks.The innovation points of this thesis are as follows:(1)Focuses on the influence of the quality of government financial information disclosure on the pricing of local government bonds,and explores the heterogeneous influence of fiscal decentralization and digital finance.(2)A new way is used to measure the quality of provincial government financial information disclosure and used for empirical test.