阅读|第三方承销、债券发行定价与盈余管理—基于中国金融债市场的经验证据

点击蓝字关注我们，感谢您对CFRI的关注与支持！

Third-party underwriting and its effects on credit spreads and earnings management
Evidence from China’s financial bond market

第三方承销、债券发行定价与盈余管理—基于中国金融债市场的经验证据

以中国投资组合为例

Huaili Lyu and Conghui Yang
School of Management, Shanghai University, Shanghai, China

Lyu, H. and Yang, C. (2019), "Third-party underwriting and its effects on credit spreads and earnings management: Evidence from China’s financial bond market", China Finance Review International, Vol. 10 No. 1, pp. 75-94. https://doi.org/10.1108/CFRI-07-2018-0067

摘要 Abstract

本文通过选取2006至2016年我国金融债数据，按照发行人和承销商是否为同一机构，将承销方式区分为第三方承销和自我承销，研究第三方承销的认证和监督功能对债券发行定价和发行人盈余管理行为的影响。研究发现：相较于自我承销，第三方承销有着更有效的事前认证和事后监督功能，从而其承销的债券定价较低并且也可以进一步限制发行人的盈余管理行为。但是，当发行人和承销商均为投资银行时，由于二者之间可能存在着相互承销关系，导致第三方承销丧失独立性，进而不能发挥有效的认证和监督功能。本研究从第三方承销的角度补充了有关承销商的认证和监督功能的理论成果。

The purpose of this paper is to examine the certification and monitoring motivations of third-party underwriting and its effects on credit spreads and earnings management of bank issuers. Ordinary least squares is used to examine the certification and monitoring effects of third-party underwriting. Furthermore, the Heckman two-stage estimation method is used in controlling the endogeneity of sample selection. The authors find that financial bonds underwritten by third-party underwriters bear lower credit spreads due to their credibly ex ante certification and effectively ex post monitoring compared with self-underwriting. Moreover, the certification of third-party underwriters can help to select good quality bond issuers with lower earnings management, and the monitoring function also plays an essential role in constraining the behavior of earnings management after the bond issues. The findings in this study suggest that underwriting types (third-party underwriting) will affect financial bond yields and bank issuers’ earnings management. On the one hand, the authors should encourage third-party underwriters to actively promote the certification and monitoring functions. For example, given commercial banks the chance to be underwriters when the bond issuers are investment banks, which is not allowed now in China’s financial bond market. On the other hand, the authors should cut off the quid pro quo relations within third-party underwriting because such relations will reduce the certification and monitoring effects of third-party underwriters. This is the first study to distinguish the certification and monitoring effects by using unique data from China’s financial bond market. And the authors further investigate the adverse effects of quid pro quo relations (hiring each other as lead underwriters) on the certification and monitoring effects of third-party underwriters.

Keywords: Earnings management, Credit spreads, Quid pro quo relations, Third-party underwriting

文章结构 Article Structure

1. Introduction
2. Institutional background and research hypotheses
2.1 The characteristics of China’s financial bond market
2.2 H1: third-party underwriting and credit spreads
2.3 H2: third-party underwriting and earnings management
3. Data, variable measurements and models
3.1 Data
3.2 Variable measurements
3.3 Regression models
4. Empirical results
4.1 Descriptive statistics
4.2 Regression results for the certification and monitoring effects of third-party underwriters
4.3 Further test with quid pro quo relations
5. Robust tests
5.1 Robust test with the lagged values of ΔDRSGLt as depended variables
5.2 Robust test with alternative certification and monitoring motivation
5.3 Robust test when controlling the endogeneity of sample selection
6. Conlusion

研究成果 Research findings

Frequency distribution of sample
Descriptive statistics of variables
Regression results for third-party underwriters’ certification and monitoring effects with all bonds
Regression results for third-party underwriters’ certification and monitoring effects with bonds issued and underwritten by investment banks
Regression results after removing the influence of quid pro quo relations
Robust test with the lagged values of DRSGLt as depended variables
Robust test with alternative certification and monitoring motivation
Regression result for third-party underwriting selection modelRobust test when controlling the endogeneity of sample selection

结论 Conclusion

In this paper, we examine the certification and monitoring effects of third-party underwriters using unique data from 2006 to 2016 in China’s financial bond market. In China, bonds are issued and underwritten by two types of financial institutions, commercial banks and investment banks. Our empirical results find that financial bonds underwritten by third-party underwriters bear lower credit spreads, suggesting that the cost of debt is lower for financial institutions choosing third-party underwriters. We argue that the lower cost of debt is due to the certification and monitoring effects of the third-party underwriters before and after the bond issues. The certification and monitoring of third-party underwriters reduce information asymmetry and risk of uncertainty for outside investors, which lower the level of price compensation of them as a result. Our further study finds that the certification of third-party underwriters can also help to choose bond issuers with lower earnings management, and the monitoring of third-party underwriters plays an effective role in constraining the behaviors of earnings management after the bond issues. More importantly, it is difficult for third-party underwriters to play monitoring roles when the bond issuers and underwriters are both investment banks, for the reason that investment banks have quid pro quo relations with each other when they issue and underwrite financial bonds in China’s financial bond market. And the robust tests through the alternative measurement of depended variables and substitution mechanisms of third-party underwriters’ certification and monitoring and controlling the endogeneity of sample selection also support our findings.
Our research contributes theoretically to the study of the certification and monitoring effects of underwriters by dividing them into two categories, self-underwriters and thirdparty underwriters. Previous research works argue that there is certification or monitoring effect for underwriters (Fang, 2005; Yasuda, 2005), and it is hard to distinguish the two functions of them (Hansen and Torregrosa, 1992; Kovner, 2012). To our knowledge, this is the first study to distinguish the certification and monitoring effects with unique data from China. Our research also provides important practical insights on the reform of China’s financial bond market. On the one hand, we should encourage third-party underwriters to actively promote the certification and monitoring functions. For example, given commercial banks the chance to be underwriters when the bond issuers are investment banks, which is not allowed now in China’s financial bond market. On the other hand, we should cut off the quid pro quo relations within third-party underwriting because such relations will reduce the certification and monitoring effects of third-party underwriters.

作者介绍

Huaili Lyu is an Associate Professor at the School of Management, Shanghai University, Shanghai, China. His research interests include accounting information and bond pricing.

《中国金融评论》介绍

Background

The China Finance Review International is published in association with the Antai College of Economics and Management at Shanghai Jiao Tong University, one of the top universities in Asia. The journal publishes quality empirical and theoretical research on financial and economic issues.

The China Financial Review International aims to promote discussions and publish works on important finance and economic issues in the world. We encourage ground-breaking research related to new and niche areas in finance, such as Fintech and socially responsible investments. Critical thinking is a key area the journal emphasizes. We welcome critiques of existing literature and comparative analysis between emerging markets and developed economies.  

Aims and Scope

The journal acts as a medium between China's finance scholars and international financial economists to share their views and investigate a wide range of issues including:

• Asset pricing

• Financial intermediation

• Derivatives

• Corporate finance

• Corporate governance

• Fintech and financial innovations

• Financial econometrics

• International finance

• Market microstructure

• Macro finance

• Household and personal finance

• Behavioral finance

• Risk management and insurance

Good reasons to publish in China Finance Review International

 • Fast and high quality peer review and rapid publication upon acceptance

 • Widest possible global dissemination of your research

 • No article-processing charges (APC)

 • Indexed by ESCI, ABI/INFORM Complete, Scopus

Submit your research now!

The journal operates a double-blind peer review system. There is no submission fee. To submit to the journal, please use the CFRI’s online submission and review system at: http://mc.manuscriptcentral.com/cfri.

To plan your submissions, please see Author Guidelines at: https://www.emeraldgrouppublishing.com/products/journals/author_guidelines.htm?id=cfri

For more information on the journal, please visit: http://www.emeraldgrouppublishing.com/cfri.htm

If you would like to discuss your paper prior to submission, or seek advice on the submission process please contact the CFRI, Editorial Office, at the following email address: [e-mail]