Publication Type
PhD Dissertation
Version
publishedVersion
Publication Date
4-2025
Abstract
With the rapid growth of China's economy, the financing needs of local governments are increasing, and municipal investment bonds, as animportant financing tool for local governments, play a pivotal role in the capital market. However, the rapid development of the municipal investment bond market has also brought about problems such as inadequate informationdisclosure and accumulation of market risks, which has aroused widespreadconcern about potential financial risks. Against this background, the state has strengthened the regulation of municipal bonds, emphasized the importance of compliance management, and introduced a series of policies and measures toimprove the transparency and standardization of the market. Internal control, as an important guarantee to realize compliance management, is closelyconnected with it. The study of internal control and municipal bond issuance is an inevitable requirement to comply with the national rule of law constructionand policy orientation, which helps municipal investment enterprises to better implement national policies and develop healthily on the track of the rule of law. This study aims to explore the impact of corporate internal control on the spreads of municipal investment bond issuance, and the role of financingconstraints and information transparency in the mechanism, while taking intoaccount the heterogeneous impact of different types of enterprises and the level of regional economic development.
This study adopts quantitative research methods, combiningempirical and theoretical analysis. The sample of the study is China's A-share listed companies from 2012-2023, and the data are obtained fromthe CathayPacific database. To ensure data quality, the study excludes ST or *ST companies, financial companies, companies with incomplete data, andcompanies with a gearing ratio greater than one. The study takes the internal control index as the dependent variable and uses statistical methods such as multiple regression analysis to quantify the impact of internal control onmunicipal bond issuance spreads and to explore the mediation and moderatingeffects. In addition, the study conducts robustness tests, including methods such as replacing explanatory variables and restricting the sample range, toverify the robustness of the findings. The background of the study is based onthe increased demand for local government financing under China's rapideconomic development and a series of problems brought about by the rapiddevelopment of the municipal bond market, such as inadequate informationdisclosure and the accumulation of market risks. Against this background, the state has strengthened the regulation of municipal investment bonds andemphasized the importance of compliance management. The study adopts a quantitative approach, combining empirical and theoretical analyses to analyze in depth the relationship between internal control and municipal bond issuance spreads.
The study finds that corporate internal control is significantly andnegatively related to municipal bond issuance spreads, indicating that the optimization of internal control helps reduce the issuance cost of municipal bonds. The study also reveals the mediating role of financing constraints andinformation transparency between internal control and municipal bondissuance spreads. In addition, the study finds that there is heterogeneitybetween state-owned and non-state-owned enterprises and regions withdifferent levels of economic development in terms of the impact of internal control on municipal bond issuance spreads. The robustness test further validates the reliability of the findings.
The findings of this study have important theoretical and practical significance for understanding the role of internal control in the municipal bond market, optimizing the financing strategies of municipal investment enterprises, and enhancing the transparency and stability of the municipal bond market. Future research could further dynamically study the relationshipbetween internal control and municipal bond issuance spreads, delve into the moderating role of macro-environmental factors, as well as explore the application of internal control in the prediction of municipal bond default risk. In addition, conducting cross-country comparative research to provide aninternational perspective for improving corporate compliance management, internal control system and municipal bond market development is also animportant direction for future research.
Keywords
internal control, municipal bonds, issue spread, compliance management
Degree Awarded
Doctor of Business Administration (Accounting and Finance)
Discipline
Accounting | Finance and Financial Management
Supervisor(s)
YANG, I-Hwa @ Holly YANG
First Page
1
Last Page
128
Publisher
Singapore Management University
City or Country
Singapore
Citation
ZHU, Feixiong.
Internal control and urban investment bond issuance. (2025). 1-128.
Available at: https://ink.library.smu.edu.sg/etd_coll/692
Copyright Owner and License
Author
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.