Title: Can Mandatory Disclosure Substitute for Relationship-Based Financing? Evidence from China's Bond Market

Speaker: Yi Ding, Associate Professor, The Chinese University of Hong Kong, Shenzhen

Host: Wenjian Xu, Associate Professor, Antai College of Economics and Management, Shanghai Jiao Tong University

Time: 10:00–11:30, Wednesday, November 18, 2026

Venue: Room 306, Antai Haoran Building, Xuhui Campus, Shanghai Jiao Tong University

Brief introduction of the content: 

We examine whether mandatory disclosure can substitute for relationship-based financing using China’s 2019 industry-specific bond disclosure reform. In a difference-in-differences design, we find that mandatory disclosure increases bond allocations to unconnected and small institutional investors, with larger effects when disclosure requirements are more extensive and pre-reform disclosure gaps are greater. The effects vary with issuer credit quality and reliance on investor relationships. Among highly rated, relationship-dependent issuers, purchases by unconnected investors increase, while purchases by connected investors decline. Among lower-rated, relationship-dependent issuers, this pattern reverses. The reform also reduces issuance credit spreads and bond overpricing and is associated with lower subsequent default and downgrade probabilities. These improvements coincide with reduced bond issuance by lower-rated and unlisted firms. Overall, our findings suggest that mandatory disclosure facilitates arm’s-length investment and improves bond pricing, but its ability to substitute for relationship-based financing depends on issuer credit quality. Public information substitutes for connected financing among stronger issuers but may reinforce reliance on connected investors among weaker, relationship-dependent issuers.

Speaker's profile:

Yi Ding is an Associate Professor of Finance at the Chinese University of Hong Kong, Shenzhen，associate area head of Finance at the School of Management and Economics.  His research spans finance and accounting, with a focus on China’s financial system, bond markets, and corporate disclosure. His work has been published in the Journal of Financial Economics (JFE), The Accounting Review (TAR), and Management Science (MS). He holds the certifications of Chartered Financial Analyst (CFA) and Financial Risk Manager (FRM).

Welcome all!