The Impact Of Cash Dividend On The Second-market Spread Of Corporate Bonds And Its Heterogeneity

Corporate bonds are an important tool for enterprises to finance directly.Compared with indirect financing methods such as bank loans,they have the advantages of long financing period and low financing cost.They are widely used in developed countries.China's corporate bond market started to develop late.After the CSRC promulgated the "Regulation for the Issuance and Transactions of Corporate Bond " in 2015,the number of corporate bond issuance and the scale of financing have been rapidly expanded.In recent years,under the double impact of the “new normal” of the economy and financial deleveraging,corporate bond defaults have occurred frequently,which has had a major negative impact on the public interest.In the context of the rapid development of corporate bonds,there is an urgent need to develop a scientific and accurate bond pricing model to promote the optimal allocation of resources,so that bond risks and returns are matched.Most of the previous literature focused on the pricing of bonds in the primary market,and fully studied the impact of credit factors and liquidity factors on bond issuance costs.However,few scholars paid attention to the potential role of corporate dividend distribution behavior on bond pricing.In addition,the previous literature,because of the objective limitations of the research data,cannot solve the endogenous problems in the regression analysis,which made some of its research conclusions criticized by later scholars.Through the combination of theory and empirical research,this paper studies the influence of dividend distribution behavior of listed companies on the trading spread of corporate bonds in the secondary market.Through the construction of theoretical framework to study the effect of cash dividends on the pricing of corporate bond transactions,the potential mechanism of action is clarified.In addition,this paper selects the corporate bond panel data issued by China's listed companies during 2008-2017,constructs the cash dividend measurement indicators in various ways,and controls the company's individual factors,debt factors and systemic factors.By establishing a pooled OLS model and a fixed effect model,regression analysis was performed on the full sample and the grouped samples,and the potential endogeneity problem was controlled by means of the instrumental variable method.The research in this paper found that:(1)The cash dividend of a listed company can significantly reduce the credit spread of corporate bonds issued by it.The increase in cash dividends conveys to the creditors a positive signal of the company's future business development,and enhances the future debt service guarantee of corporate bonds.The results verify the existence of the influence of dividend distribution behavior on bond pricing.(2)Compared with low-rated bonds,the cash dividends distributed by the issuers of high-rated bonds have a greater impact on the credit spread of their corporate bonds.High-rated bonds have the characteristics of low default risk,strong liquidity and large number of investors.Their trading in the secondary market is more active and the pricing efficiency is higher,which can better reflect the positive signal from the increase of cash dividends.(3)Compared with short-term bonds,the cash dividends distributed by longterm bond issuers have a greater impact on the credit spread of their corporate bonds.Long-term bond investors are more concerned about the company's long-term solvency,so the increase in cash dividends will send a positive signal of future operations to significantly reduce the credit spread of long-term corporate bonds.(4)Compared with non-state-owned enterprises,the cash dividends distributed by state-owned enterprises have a more significant impact on the credit spread of their corporate bonds.Due to the higher degree of separation between ownership and management rights,state-owned enterprises have more prominent agency problems between their shareholders and manager.The distribution of cash dividends can reduce free cash flow and inhibit agency problems,and can reduce the inefficient investment of enterprises to increase the debt service of enterprises.Guarantee,thereby reducing the credit spread of bonds.The main contribution of this paper is: Firstly,the research content introduces the company's dividend distribution behavior into the bond pricing framework,and focuses on the dynamic pricing process of bonds in the secondary market,enriching the existing research in this field;secondly,the data collected more comprehensive panel data,and the use of relevant means to eliminate endogeneity,the research conclusions are more reliable.