Corporate financialization and the spread of issuing bonds

Abstract

This paper analyzes the relationship between corporate financialization and credit spreads of bond issuance. We find that the increase of corporate financialization can significantly reduce the issuance credit spreads of bond-issuing enterprises; the increase of corporate financialization reduces the credit spreads of corporate bond issuance through the improvement of corporate business performance. There is a positive U-shaped relationship between the financialization of private and listed enterprises and the development of credit spreads. Our findings provide policy implication for regulators focusing corporate financing and bond market.