Audit Quality,Rating Agency's Reputation And The Cost Of Corporate Bond

In the context of China's vigorous development of the bond market,the scale of corporate bonds has expanded rapidly and the proportion of direct financing has been greatly improved.However,the past two years,China's bond market frequent exposure of default events.Throughout these defaults,the issue of inadequate disclosure of information and the issue of moral hazard is an important cause of default.Therefore,it is of great practical significance to study the information asymmetry problem in the corporate bond market.Based on the above background,this paper chooses the corporate bonds issued in China from 2010 to 2016 as the sample.Based on the information asymmetry theory,signal transfer theory and reputation theory,this paper uses empirical research method to study the role of independent audit in protecting bond contract from the perspective of external governance.Firstly,this paper studies the two paths of audit quality affecting the issuance cost of corporate bonds and validates the direct path of audit quality which directly affects the issuance cost of corporate bonds and the indirect path of audit quality which affects the issuance cost of corporate bonds through credit rating.Secondly,this paper studies the role of rating agency's reputation on the relationship between credit rating and corporate bond issuance costs.The results show that rating agencies with high reputation have significantly contributed to the effect of credit rating on the cost of corporate bonds.In addition,this paper continues to examine the relationship between audit quality,rating agency's reputation and corporate bond costs.The results show that high reputation rating agencies have promoted the role of high quality audits in reducing the cost of corporate bonds through high credit ratings.Low reputation rating agencies have suppressed the role of high quality audits in reducing corporate bond issuance costs through high credit ratings.Thus,the audit quality and rating agency's reputation is complementary in the effect of audit quality on the costs of corporate bonds through the credit rating.Through this study,it hopes to provide some reference value to reduce the cost of issuing bonds,and help the bond investors to effectively identify the signals released by the issuer and make reasonable allocation of funds to reduce the transaction costs in bond market.In addition,it hopes to provide some reference for the formulation ofrelevant policies of the bond market regulators.