The 48th Frontier Forum for Digital Technology and Finance

Abstract：

Exploiting China’s 2019 information disclosure regulation as a quasi-natural experiment, this study investigates how government information transparency affects implicit bond pricing. We find that enhanced local government disclosure significantly increases implicit bond issuance costs. Mechanism analysis demonstrates that transparency operates through two channels: eroding investor expectations of implicit government guarantees and  reducing fiscal subsidies to local government financing vehicles (LGFVs), both of which contribute to higher risk premiums. These effects are particularly strong for unsecured bonds, long-term maturities, and issues with substantial institutional investor participation. While the resulting increase in financing costs constrains LGFVs' capital raising capacity, we provide evidence that improved disclosure enhances bond pricing efficiency by reducing uncertainty about implicit guarantees during market valuation.

Speaker Introduction：

Rong Hu is an Assistant Professor in the field of real estate finance at Baruch College, City University of New York. Her primary research areas include real estate finance and economics, empirical corporate finance, and banking. Her research papers have been presented at various international academic conferences on finance and real estate, and published in top journals such as American Economic Review, Management Science, and Journal of Financial and Quantitative Analysis.