Debt Rating Initiations： Natural Evolution or Opportunistic Behavior？

The authors examine a firm＇s decision to begin issuing debt in public bond markets and find that it is a function of both life cycle influences and opportunistic timing. Defining life cycle factors to encompass both a firm＇s age in years and its underlying characteristics, the authors confirm that bond market participation is generally restricted to large, mature firms. Summary statistics show that finns obtain their initial bond ratings on average 9.5 years after their equity initial public offering （IPO） and 11.8 years after initiating dividend payments. Growth rates, capital expenditures, and cash flow volatility all decline as the firm accesses public debt markets, consistent with entry into the mature phase of its life cycle. With respect to opportunistic timing, it is asked whether entry into public bond markets follows strong performance （or precedes weak performance） at both the firm and market levels. At the firm level, the authors find that the debt IPO occurs following periods of strong operating performance and high excess stock returns. At the market level, entry coincides with favorable interest rates and default spreads. The benefits of careful timing result in firms receiving initial bond ratings that are stronger than what would be predicted; however, there is no evidence of abnormal numbers of downgrades for these firms in subsequent years.

Mechanism and rate constants for complete series reactions of 19 fluorophenols with atomic H

Fluorine-containing halogenated fluorophenol may have effect as intermediate species involved in the formation of polyfluorinated dibenzo-p-dioxin/dibenzofurans （PFDDs/Fs）. The mechanism for the atomic H initiated reactions with complete series of nineteen fluorophenol congeners was studies using the density functional theory. At the MPWB1K,/6-31＋G（d,p） level, the geometries and frequencies of reactants, transition states, and products were obtained, and the accurate energetic values were acquired at the MPWB 1K/6-311 ＋G（3df,2p） level. The rate constants were evaluated by the canonical variational transition-state theory with the small curvature tunneling contribution over a wide temperature range of 600-1000 K. The study shows that the intramolecular hydrogen-bond in the ortho-substituted FPs as well as the inductive effect of the electron-withdrawing fluorine and steric repulsion of multiple substitutions may ultimately be responsible for the relative strength of the O-H bonds in FPs. The results can be used for further studies on PFDD/Fs formation mechanism.

Confucian culture and corporate bond pricing

We investigate the effect of Confucian culture on corporate bond pricing.Using the birthplace data of 56,759 Jinshi in the Ming and Qing dynasties to construct a proxy of Confucian culture,we find a significantly negative relation between Confucian culture and bond pricing:the stronger the Confucian atmosphere of the corporate headquarters’location,the higher the bond rating and the lower the credit spread.This conclusion still holds after using the distance to the nearest ancient printing office as an instrumental variable and a series of robustness tests.The mechanism test shows that Confucian culture can improve the pricing efficiency of corporate bonds by fostering investors’trust,alleviating principal-agent problems and restraining bad corporate behaviors.Moreover,the impact of Confucian culture on corporate bond pricing is greater for firms located in regions with weak legal and other formal institutional constraints and for unlisted companies.Our study complements the literature on culture and bond pricing,and provides policy insights from traditional Chinese wisdom for improving the efficiency of financial markets.

The impact of bond rating downgrades on common stock prices in China

In this paper,we examine how bond rating downgrades affect common stock prices in China by using the data of all the bond rating downgrades in China during the period from 1 January 2008 to 30 May 2016.To provide empirical evidence for the theory in Goh and Ederington(1993),we classify the samples according to the downgrade reasons and the bonds’time to maturity and examine the abnormal returns of each group in different windows.The empirical results show that the downgrades due to deteriorating financial prospects have a negative effect on stock prices and that this effect lags behind.The downgrades due to leverage changes have no significant effect on stock prices.Meanwhile,the variation in the decrease in stock prices due to rating downgrades of bonds that will mature within three years is significantly larger than that of those which will mature after more than three years.

An Overview of China’s Bond Markets

This paper introduces the current structure and practice of China＇s bond markets in general and corporate bond market in particular. It analyses the factors behind the slow development of China＇s bond markets： heavy government intervention, underdevelopment of direct financing, etc. It also puts forward policy options in promoting bonds markets development, including reform of government regulatory framework and improving financial intermediaries and services.