Is it Worth Issuing Bonds in China? Evidence from Stock Market Reactions

37 Pages Posted: 11 Feb 2016 Last revised: 12 Jan 2019

See all articles by Paul-Olivier Klein

Paul-Olivier Klein

University of Aberdeen Business School; University of Strasbourg

Laurent Weill

University of Strasbourg - LaRGE Research Center (Laboratoire de Recherche en Gestion et Economie)

Date Written: December 15, 2015

Abstract

There has been a considerable expansion of corporate bond markets in China in the recent years. The objective of this study is to examine the stock market reaction following bond issuance by Chinese companies. In addition to analyzing for positive or negative reactions to bond issues, we consider the influences of ownership and management characteristics on the stock market reaction. Applying an event-study methodology to a sample of 481 bond issues of 347 Chinese companies over the period 2009–2013, the univariate results show that Chinese bond issues typically generate a positive stock market reaction. The reaction is only significantly positive, however, in the case of central state-owned companies (as opposed to those owned by local or provincial governments). The multivariate results indicate that insider ownership influences stock market reaction to a bond issue, while management characteristics have no discernable impact.

Keywords: China, emerging markets, corporate bonds, event study

JEL Classification: G14, P34

Suggested Citation

Klein, Paul-Olivier and Weill, Laurent, Is it Worth Issuing Bonds in China? Evidence from Stock Market Reactions (December 15, 2015). BOFIT Discussion Paper No. 33/2015, Available at SSRN: https://ssrn.com/abstract=2730539

Paul-Olivier Klein (Contact Author)

University of Aberdeen Business School ( email )

Dunbar Street
Aberdeen, Scotland AB24 3QY
United Kingdom

University of Strasbourg ( email )

61, avenue de la foret noire
Strasbourg, Alsace 3000
France

Laurent Weill

University of Strasbourg - LaRGE Research Center (Laboratoire de Recherche en Gestion et Economie) ( email )

61 Avenue de la Forêt Noire
F-67085 Strasbourg Cedex
France

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