Confucian culture and corporate bond pricing
We investigate the effect of Confucian culture on corporate bond pricing. Using the birthplace data of 56,759 Jinshi in the Ming and Qing dynasties to construct a proxy of Confucian culture, we find a significantly negative relation between Confucian culture and bond pricing: the stronger the Confuc...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
Elsevier
2023-03-01
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| Series: | China Journal of Accounting Research |
| Subjects: | |
| Online Access: | http://www.sciencedirect.com/science/article/pii/S175530912200065X |
| _version_ | 1797897288978268160 |
|---|---|
| author | Lingling Zhai Xudong Tang |
| author_facet | Lingling Zhai Xudong Tang |
| author_sort | Lingling Zhai |
| collection | DOAJ |
| description | We investigate the effect of Confucian culture on corporate bond pricing. Using the birthplace data of 56,759 Jinshi in the Ming and Qing dynasties to construct a proxy of Confucian culture, we find a significantly negative relation between Confucian culture and bond pricing: the stronger the Confucian atmosphere of the corporate headquarters’ location, the higher the bond rating and the lower the credit spread. This conclusion still holds after using the distance to the nearest ancient printing office as an instrumental variable and a series of robustness tests. The mechanism test shows that Confucian culture can improve the pricing efficiency of corporate bonds by fostering investors’ trust, alleviating principal–agent problems and restraining bad corporate behaviors. Moreover, the impact of Confucian culture on corporate bond pricing is greater for firms located in regions with weak legal and other formal institutional constraints and for unlisted companies. Our study complements the literature on culture and bond pricing, and provides policy insights from traditional Chinese wisdom for improving the efficiency of financial markets. |
| first_indexed | 2024-04-10T07:55:07Z |
| format | Article |
| id | doaj.art-4114e384ba334a789637ec9fcf48bd13 |
| institution | Directory Open Access Journal |
| issn | 1755-3091 |
| language | English |
| last_indexed | 2024-04-10T07:55:07Z |
| publishDate | 2023-03-01 |
| publisher | Elsevier |
| record_format | Article |
| series | China Journal of Accounting Research |
| spelling | doaj.art-4114e384ba334a789637ec9fcf48bd132023-02-23T04:30:48ZengElsevierChina Journal of Accounting Research1755-30912023-03-01161100285Confucian culture and corporate bond pricingLingling Zhai0Xudong Tang1School of Intelligent Finance & Accounting Management, Guangdong University of Finance & Economics, ChinaBusiness Administration School, South China University of Technology, China; Corresponding author.We investigate the effect of Confucian culture on corporate bond pricing. Using the birthplace data of 56,759 Jinshi in the Ming and Qing dynasties to construct a proxy of Confucian culture, we find a significantly negative relation between Confucian culture and bond pricing: the stronger the Confucian atmosphere of the corporate headquarters’ location, the higher the bond rating and the lower the credit spread. This conclusion still holds after using the distance to the nearest ancient printing office as an instrumental variable and a series of robustness tests. The mechanism test shows that Confucian culture can improve the pricing efficiency of corporate bonds by fostering investors’ trust, alleviating principal–agent problems and restraining bad corporate behaviors. Moreover, the impact of Confucian culture on corporate bond pricing is greater for firms located in regions with weak legal and other formal institutional constraints and for unlisted companies. Our study complements the literature on culture and bond pricing, and provides policy insights from traditional Chinese wisdom for improving the efficiency of financial markets.http://www.sciencedirect.com/science/article/pii/S175530912200065XConfucian cultureSoft informationBond ratingCredit spread |
| spellingShingle | Lingling Zhai Xudong Tang Confucian culture and corporate bond pricing China Journal of Accounting Research Confucian culture Soft information Bond rating Credit spread |
| title | Confucian culture and corporate bond pricing |
| title_full | Confucian culture and corporate bond pricing |
| title_fullStr | Confucian culture and corporate bond pricing |
| title_full_unstemmed | Confucian culture and corporate bond pricing |
| title_short | Confucian culture and corporate bond pricing |
| title_sort | confucian culture and corporate bond pricing |
| topic | Confucian culture Soft information Bond rating Credit spread |
| url | http://www.sciencedirect.com/science/article/pii/S175530912200065X |
| work_keys_str_mv | AT linglingzhai confuciancultureandcorporatebondpricing AT xudongtang confuciancultureandcorporatebondpricing |