Do political connections matter to bondholders? Evidence from China

Po Hsin Ho, Yu Chun Wang, Chih-Yung Lin*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

4 Scopus citations


This article examines the association between political connections and the pricing of bonds in China. Political connections are associated with higher at-issue spreads on corporate bonds, implying that political connections do not ensure the alignment of interests between managers and bondholders. The adverse effects of political connections on borrowing costs are eliminated when the chairman and the CEO are politically connected. Evidence suggests that bondholders price new debt issuances by using the information about the political backgrounds of top managers. Moreover, the costs and benefits of political connections for bondholders vary with the extent of the connectedness of a firm.

Original languageEnglish
Pages (from-to)1240-1245
Number of pages6
JournalApplied Economics Letters
Issue number15
StatePublished - 13 Oct 2015


  • China
  • bond spreads
  • bondholders
  • political connections


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