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The certification effect of government tender procurements: evidence from the cost of debt

Author

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  • Chunqiang Zhang
  • Wanqiang Ye
  • Linlang Zhang
  • Kam C. Chan
  • Fan Xia

Abstract

Using a sample of government tender procurement (GTP) data in China, we document that firms with GTPs have a lower cost of debt. We hypothesize that when a firm has GTPs, it conveys positive signals to creditors to reduce the cost of debt. Additional analysis shows that the effect is more salient for firms with first‒time and non‒local GTPs, with non‒big 4 auditors, and small size. Our study contributes to the literature by establishing GTP as a credible certification mechanism that lowers debt financing costs. We advance the theoretical understanding of government – business relationships through framing GTP as a credible signal.

Suggested Citation

  • Chunqiang Zhang & Wanqiang Ye & Linlang Zhang & Kam C. Chan & Fan Xia, 2026. "The certification effect of government tender procurements: evidence from the cost of debt," Asia-Pacific Journal of Accounting & Economics, Taylor & Francis Journals, vol. 33(3), pages 529-550, May.
    • Handle: RePEc:taf:raaexx:v:33:y:2026:i:3:p:529-550
    DOI: 10.1080/16081625.2026.2646194
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