The public yield spreads of bonds vary widely between Chinese provinces/municipalities, with the average for the highest province double that of the lowest one. Although we find that these patterns are mainly attributable to economic and legal conditions, locational effects like geographic distance and public firm credit ratings also appear to be contributory. We show that these effects are induced by different regional informational environments and are robust to controlling for potential endogenous location choices.
- Bond yield spreads
- Firm location
- Geographic peer effects
- Information environment
Hu, T., Hu, X., Huang, H., Shi, J., & Wang, H. (2019). Locational effects and the cost of corporate bonds: the role of information. Accounting and Finance, 59(S2), 1977-2016. https://doi.org/10.1111/acfi.12547