The Impact Of Media Coverage On The Cost Of Corporate Bond Financing

On August 14,2007 China Securities Regulatory Commission promulgated the pilot regulation for issuance of corporate bond.A month later,Chinese Yangtze Power Limited by Share Ltd issued a scale of 4 billion corporate bonds--"07 long debt" and listed on the Shanghai stock exchangeon October 12th.By 2015,the corporate bond market has continuously developed for 9 years.Especially in 2015,after the Commission formally promulgated the regulation for issuance and transaction of corporate bond,great reform and innovationhave taken place in both the primary market and secondary market of China corporate bond,the issuance of the approval process is simplified and the efficiency is greatly improved,the scope of the issue of the subject is expanded,the transaction places and special bonds,widening project revenue bonds and other innovative varieties is launched one after another.So that the size of corporate bonds in 2015 has grown by 619.18%compared to 2014.The corporate bond not only broaden the financing channels for China's enterprises,decrease the dependence of debt financing on bank loans,but also can improve the current situation of China's enterprises keen on equity financing misappropriating,improve the China's capital market.The separation of corporate ownership and management and information asymmetry are remarkable characteristics of modern enterprises.Bondholders as the external investors,there is also the information asymmetry between them and the operator.Corporate bond financing cost is affected by the value of the enterprise market,and the market value of an enterprise depends on the risk level of the enterprise investor cognition,when investors think the company is at a high level of risk,they will demand a higher return on investment as risk compensation,and judge the company is at a lower risk level when they are willing to accept lower return on investment.Therefore,the cost of corporate bond financing is affected by investors' awareness on the level of corporate risk.In recent years,whether or not the media reports can influence the corporate governance effect has received the scholars' attention.A number of studies have confirmed that the media not only focuses on market demand and economic benefits,but also has the function of social and political function and information disclosure.As an significantcarrier of information disclosure,the media transfer all relevant information to the capital market and investors,to remit the situation of information asymmetry that faced byboth sides of the financial debt and credit,at the same time,it also affect the value judgment of corporate bond investors to enterprise risk level,thus affecting the enterprise bond financing cost.Under the background of the implementing of regulation for issuance and transaction of corporate bond,This paper selects 319 public issuance of corporate bonds of enterprises in Shanghai and Shenzhen exchange in 2015 as the research sample,using the empirical research method,on the base of the hypothesis of corporate governance,information asymmetry theory,agency cost theory,risk perception and investors relative scale,put forward the hypothesis and the empirical test and related results.This paper mainly studies the impact of media on the cost of bond financing in the primary market.When determining the cost of bond financing companies,in order to deduct the macro factors on the cost of debt of the company,this paper use the difference between coupon bond interest and yield to maturity of the government bond in the same period.The study of this paper shows that,in the case of controlling certain related variables,the more positive the content of media reports,the lower the financing cost of corporate bonds.At the same time,the paper also studies the role of media reports on the cost of corporate bond financing under different ownership.The results prove that the nature of the ownership of the enterprise will affect the impact of media coverage on the cost of corporate bond financing,that is to say,the role of the media coverage on the financing costs of non-state owned corporate bonds is even greater.