Cross-owners and bond issue pricing: coordination or collusion?
Using a sample of listed Chinese firms from 2007 to 2020, we investigate the governance implications of cross-ownership in corporate bond markets. We find that cross-ownership significantly reduces bond issuance spreads, suggesting that synergistic governance effects outweigh potential collusion ris...
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| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
| Published: |
Elsevier
2025-06-01
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| Series: | China Journal of Accounting Research |
| Subjects: | |
| Online Access: | http://www.sciencedirect.com/science/article/pii/S1755309125000176 |
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| Summary: | Using a sample of listed Chinese firms from 2007 to 2020, we investigate the governance implications of cross-ownership in corporate bond markets. We find that cross-ownership significantly reduces bond issuance spreads, suggesting that synergistic governance effects outweigh potential collusion risks. This effect operates through two channels: reducing information asymmetry between shareholders and creditors and lowering firm risk. The effect is stronger when cross-owners hold shares in more peer firms and retain shares longer but weaker for state-owned enterprises, long-term bonds and firms with robust information intermediaries. Our findings contribute to the corporate governance literature by demonstrating how cross-ownership enhances creditor protection, providing insights into optimizing ownership structures for debt financing, particularly in emerging markets with inadequate institutional monitoring. |
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| ISSN: | 1755-3091 |