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Navigating through noise: Media's role in mitigating corruption's impact on bond markets in China

Author

Listed:
  • Xiao, Zuoping
  • Zai, Jingjing
  • Su, Qiaoling

Abstract

This study examines corruption's impact on China's bond market and the role of media attention amid flawed institutions. Analyzing corporate bonds from Chinese listed companies (2009–2022), it explores the relationships between corruption, media attention, and bond covenants. Results show that higher corruption correlates with smaller bond sizes, increased credit spreads, and stricter covenants. Media attention mitigates corruption's negative impacts on bond sizes and credit spreads, showing a U-shaped moderating effect on the corruption-covenant relationship. The findings are confirmed through tests including Instrumental Variables (IV), Propensity Score Matching (PSM), Heckman models, and Three-Stage Least Squares (3SLS). Tests indicate that corruption affects bond covenant design by influencing information asymmetry and agency conflicts. A heterogeneity analysis shows that media's effect is stronger in markets with greater marketization and investor focus.

Suggested Citation

  • Xiao, Zuoping & Zai, Jingjing & Su, Qiaoling, 2025. "Navigating through noise: Media's role in mitigating corruption's impact on bond markets in China," Research in International Business and Finance, Elsevier, vol. 79(C).
    • Handle: RePEc:eee:riibaf:v:79:y:2025:i:c:s0275531925003319
    DOI: 10.1016/j.ribaf.2025.103075
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