Recently, a paper titled “Bond market liberalization and corporate investment”, co-authored by Associate Professor WANG Yanhui from the School of Accounting, Dongbei University of Finance & Economics, Associate Professor FU Renhui of Shanghai Jiao Tong University, Associate Professor GAO Fang of Donghua University, and Professor ZHANG Bohui of the Chinese University of Hong Kong, Shenzhen (CUHK-Shenzhen), has been published online in the Journal of International Business Studies.

This study investigates how bond market liberalization influences corporate investment. The authors find that bond market liberalization significantly reduces corporate investment. Mechanism tests indicate that this effect works primarily through stricter debt covenant constraints, higher reputational costs, and greater litigation risk. Further analysis reveals that the investment reduction effect is more pronounced among firms with weaker corporate governance, and this decline concentrates on overinvestment rather than value-enhancing investment. These findings suggest that foreign bondholders can discipline managers’ inefficient expansion without inducing excessive conservatism. In addition, following bond market liberalization, firms exhibit lower default risk, narrower credit spreads, and higher firm value. Overall, the findings highlight the distinct, non-ownership-based governance role of foreign debtholders and suggest that bond market liberalization can improve resource allocation efficiency and financial stability in emerging markets characterized by relatively weak domestic institutions.

Widely recognized as a top-tier journal in the field of international business, the Journal of International Business Studies is listed in the prestigious UTD 24 journal collection and enjoys outstanding global academic reputation and influence. This publication is the 11th paper by the School of Accounting, DUFE, in recent years that has appeared in world-leading academic journals, marking another important achievement in strengthening DUFE’s global academic visibility and influence in accounting.

Written by: QU Qi

Source: School of Accounting