Cross-shareholding network and corporate bond financing cost in China |
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| Institution: | 1. School of Economics & Management, Southwest Jiaotong University, 111 North 1st Section of Second Ring Road, Chengdu, Sichuan 610031, PR China;2. School of Economics & Management, Nanchang University, No.999 Xuefu Road, Nanchang, Jiangxi 330000, PR China;1. School of Economics and Management, Open University of Cyprus, Latsia 2252, Cyprus;2. University of Pretoria, Department of Economics, Pretoria 0002, South Africa;3. University of Evry, Batiment La poste, Office 226, 2, rue du Facteur, Cheval 91025, Évry, France;1. School of Economics and Management, Beihang University, Beijing, China;2. Beijing Advanced Innovation Center for Big Data and Brain Computing, BeihangUniversity, Beijing, China;3. Key Laboratory of Complex System Analysis, Management and Decision (BeihangUniversity), Ministry of Education, Beijing, China;4. Paul J. Hill School of Business, University of Regina, Regina, Canada;5. School of Business and Economics, The University of Wisconsin, Superior, U.S, Canada |
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| Abstract: | This study examines the effect of cross-shareholding network centrality on the cost of corporate bond financing. Based on a sample of Chinese A-share listed firms that issued general corporate bonds from 2007 to 2018, we adopt a social network analysis method and use three indicators (Degree, Betweenness, and Eigenvector) and the principal factor (Composite) extracted from them to measure the firms’ centrality in the cross-shareholding network. We find that bondholders’ demand lowers bond yield spreads for firms with higher cross-shareholding network centrality. In further analyses, we explore the impact mechanisms using mediator models and find that such centrality promotes resource accessing, information disclosure, and corporate governance, thus decreasing corporate bond financing cost. In addition, we incorporate the moderate effect of geographical location and find that the relationship between cross-shareholding network centrality and corporate bond financing cost is more significant in firms located in remote places. |
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| Keywords: | Cross-shareholding network centrality Corporate bond financing cost Bond yield spreads H63 G34 |
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