Equity Pledge Of Controlling Shareholders And Pricing Of Corporate Bonds

In 2007,the CSRC promulgated the “Measures for Piloting Corporate Bond Issuance”,marking the emergence of a market-oriented corporate bond market in China's capital market.The development of the corporate bond market not only broadens the financing channels of enterprises,but also reduces the cost of corporate bond financing,which helps to optimize the capital structure of enterprises and optimize the allocation of capital market resources.In recent years,as China's corporate bond market has become more mature and growing,the financing scale of corporate bonds has also expanded rapidly,and the proportion of direct financing has increased substantially,but the existence of information asymmetry and principal-agent problems has made the problem of financing difficult and expensive financing always plaguing enterprises.The controlling shareholder's equity pledge will aggravate the agency problem between the controlling shareholder and the minority shareholders,and increase the risk of change of control of the listed company,which will lead to instability of the company's management,management system and management policies,bond investors may require higher credit spreads to compensate,and the risk caused by controlling shareholders' equity pledge may be an important factor affecting the pricing of listed companies' bonds.Moreover,literature studies have shown that more transparent financial information can reduce the credit risk of creditors.As an external governance mechanism,auditing has the functions of signal transmission,supervision and insurance,which can effectively alleviate the risk of information asymmetry between investors and issuers,the company hires high-quality auditors to help convey positive signals to the market,show the high quality of financial information disclosure,increase investor credibility,thereby reducing credit risk of creditors and reducing bond financing costs.Therefore,this paper mainly studies the relationship between controlling shareholder pledge and corporate bond pricing based on the perspective of independent auditing.Based on the research of China's bond market,this paper studies the influence of controlling shareholders' equity pledge on corporate bond pricing based on information asymmetry and signal transmission theory,taking the corporate bond data issued by the Shanghai and Shenzhen A-share listed companies in 2007-2017 as a sample,the empirical research method was used to study the relationship between the controlling shareholder's equity pledge and corporate bond pricing,and from the perspective of independent auditing,the auditing expertise of accounting firms is used to measure the audit quality,and the impact of audit quality on the relationship between controlling shareholders' equity pledge and bond pricing is verified.The research results show that the controlling shareholder equity pledge will increase the company's default risk,and bond investors may require higher credit spreads to compensate,resulting in higher financing costs for enterprises.As an external governance mechanism,independent auditing has a signal transmission function,which helps to reduce the risk of information asymmetry and reduce the credit spread of corporate bonds.When the quality of the audit is high,the positive impact of the controlling shareholder's equity pledge on the bond pricing is weak,and when the audit quality is low,the controlling shareholder's equity pledge has a positive impact on the bond pricing.In addition,in order to further verify the signal transmission function of independent audit,this paper replaces the audit expertise with abnormal audit fees.The results show that the higher abnormal audit fees will further increase the positive impact of equity pledge on bond pricing.