The Influence Of Underwriters' Reputation On Bond Issuance Costs

Bond financing is an important form of corporate financing,especially in the current environment of poor direct financing,whether the successful and low-cost bond financing can be related to whether the enterprise can survive in the economic winter.Bond financing costs mainly include bond coupon rates,underwriting fees,and rating fees.Its main component is the interest that is promised to be paid to investors – the bond coupon rate.In the process of bond underwriting,bond underwriters are often in the position of information transmission.Among them,the reputation of the underwriters plays a role in proving the efficiency of information transmission.The information transmitted by the higher reputation underwriters is generally considered to be more effective.In the study of many foreign scholars,the reputation of underwriters has been proved to have a significant impact on IPO underpricing;therefore,the reputation of underwriters is also likely to be one of the important variables affecting bond issuance costs.The research ideas in this paper combine the background of China's current currency transmission,and study the main part of bond issuance cost-the relationship between bond issuance interest rate and underwriters' reputation.The author used the corporate bond data from 2008 to 2018,the underwriter data in the wind database and the issuer's financial data,and the securities firm's rating data published by the CSRC,supplemented by manual supplementation and revision of some data.In the main regression part,this paper uses the bond coupon yield and the credit spread that excludes the benchmark interest rate as the explanatory variable,and the underwriters reputation measured by the underwriting market share as the explanatory variable for OLS regression,and on this basis,the sample is The group is again brought into the regression test.The results show that:(1)The improvement of the reputation of the underwriters can,to a certain extent,reduce the coupon rate of the underwriting bonds,and also have a significant inhibitory effect on the credit spreads.(2)In the market with different liquidity,the reputation of the underwriters has different inhibitory effects on the bond issuance rate.In a market with high liquidity,the repressive effect of underwriters' reputation is more obvious.(3)The influence of the underwriters' reputation on the bond issuance rate is different.The state-owned underwriters “naturally born” carry high reputation attributes,and the effect on the bond issuance rate is more obvious.(4)From the perspective of transmission mechanism,the empirical test proves that information asymmetry and reverse guarantee are the two ways of conducting the reputation of the underwriters on the bond issuance rate.In terms of robustness test,this paper mainly uses the manually extracted SFC brokerage rating data,and replaces the explanatory variables based on the data.At the same time,considering the endogenous problems that may exist in the mechanism test,this paper also uses the PSM propensity score matching method to test the endogeneity of this sample.Through the above test methods,the research conclusions of this paper can still remain significant under different conditions.Therefore,the robustness of the results of this study is established.The innovation of this paper is mainly from four angles:(1)Transfer the research object from IPO underpricing to bond issuance cost.(2)A group discussion was held on the restraining relationship between the underwriter's reputation and the bond issuance cost.(3)An empirical test was conducted on the transmission mechanism of the underwriter's reputation to the bond issuance cost.(4)Using the data collected manually to innovate the variables and methods.In the conclusion of the study,the research contents of this paper are summarized,and the enlightenment and suggestions are proposed from the perspective of the supervisory layer and the underwriters.Based on the reputation of underwriters,this paper studies the impact of underwriters' reputation on bond issuance costs,enriches the research content of underwriters' reputation and bond issuance costs,and provides new ideas for studying the factors affecting bond issuance costs.In addition,this paper also explores the impact of the underwriters of different equity backgrounds and the reputation of underwriters in different market environments on bond issuance costs.The empirical analysis of information asymmetry and reverse guarantee transmission mechanism is carried out.Linking the reputation of the underwriters to the bond market,systematically analyzing the role of the underwriters' reputation in the bond market and the way they influence,provides an innovative perspective for studying the role of underwriters' reputation.