Work

The geographic distance of underwriter and bond financing costs: Evidence from China

Year: 2025

Type: article

Abstract: Geographic distance is an objective constraint on companies’ access to underwriters in corporate bond financing, influences capital liquidity. Using Chinese credit bonds issued between 2010 and 2022, this paper examines the mechanism through which underwriter location affects bond financing costs (BFCs). The findings indicate a significant positive relationship between underwriter location and corporate BFCs; the digital transformation of underwriters partially mediates this effect. Furthermore, a strong underwriter reputation, high transparency of corporate information, and a developed regional market can significantly mitigate the positive impact of geographic distance on BFCs. The conclusions contribute to the theoretical understanding of the influence of geographic distance on financial markets and offer relevant policy recommendations for underwriters, bond issuers, and investors.

Source: International Review of Economics & Finance

DOI: 10.1016/j.iref.2025.104569

Authors: Xiaojie Qu, Huaping Sun

Institutions: Jiangsu University, University of Science and Technology Beijing

Language: English

Topic: Credit Risk and Financial Regulations

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: gold

Estimated APC paid: $1,930

Funders: National Natural Science Foundation of China, Graduate Research and Innovation Projects of Jiangsu Province