Do multiple large shareholders affect corporate bond yield spreads? Evidence from China

Abstract

We investigate the impact of multiple large shareholders on corporate bond yield spreads. We find that the presence of multiple large shareholders lowers bond yield spreads. In cross-sectional analysis, we find that the impact of multiple large shareholders on bond yield spreads only exists in subsamples with severe agency costs, high default risk, and poor information asymmetry, indicating that multiple large shareholders (MLS) reduce corporate bond yield spreads by disciplining the expropriation of controlling shareholders and lowering information asymmetry. Overall, our findings document a positive economic consequence of multiple large shareholders from the perspective of debt financing costs.