Bond offerings in China: The role of ownership

Paul-Olivier Klein, Laurent Weill

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Abstract

This study appraises the value created by a bond offering in China, where high levels of state ownership and insider ownership raise concerns about the use of the proceeds. To estimate the impact of a bond issue on the firm's value, we apply an event‐study methodology on a sample of 481 issues of 347 Chinese companies over the period 2009–2013. It turns out that state ownership has a positive impact on the value of a bond offering for shareholders, which is consistent with an implicit guarantee of the issue by the state. For privately owned companies, insider ownership exerts a nonlinear impact on the firm's value, supporting an aligning effect in the use of the proceeds. Overall, the study confirms the key role of ownership structure in Chinese firms.
Original languageEnglish
Pages (from-to)363-399
Number of pages37
JournalEconomics of Transition
Volume26
Issue number3
Early online date3 Apr 2018
DOIs
Publication statusPublished - Jul 2018

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Keywords

  • China
  • ownership
  • corporate bonds

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