Does Geographical Distance Affect Bond Issue Pricing?——An Analysis Based on the Information Asymmetry Perspective
Bond issue pricing and default issues have long been a hot topic of concern for both academics and prac-titioners.Based on the information asymmetry perspective and combining the theories of information economics and new economic geography,the effect of geographic distance between underwriters and issuers on the pricing of bond is-suance is empirically examined using credit bonds issued from 2003 to 2021 as the research sample.It is found that there is a positive correlation between the geographic distance between the underwriter and the issuer and the bond cred-it spread,i.e.,the closer the geographic distance,the smaller the bond credit spread.Mechanistic analysis shows that geographic distance affects the pricing of bond issues mainly through the type and cost channels of information,as evi-denced by the fact that geographic distance has a greater impact on the credit spreads of unlisted corporate bonds,which have a higher degree of soft information asymmetry,and on the credit spreads of bonds underwritten by non-bank underwriters,which have a higher cost of information acquisition.In addition,geographical distance is also able to have an impact on bond defaults.Therefore,financial infrastructure should be strengthened,regulatory and informa-tion disclosure requirements should be reinforced,and financial resources should be promoted to serve the local com-munity in order to facilitate the healthy development of China's bond market.
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