Definition of variables
| Variable | Definition |
|---|---|
| IssueSpread | Yield to maturity on the bond issuance date minus the yield to maturity on a treasury bond of similar maturity |
| Post | A dummy variable that equals 1 on the dates after bankruptcy courts were established and 0 otherwise. For bonds whose issuers are located in cities with no bankruptcy court, Post equals 0 all the time |
| Bondsize | The natural logarithm of bond offering amount |
| Bondterm | The natural logarithm of bond duration in years |
| Bondrate | The ordered value of bond's credit rating (A−1 = 1, AA− = 2, AA = 3, AA+ = 4 and AAA = 5) |
| Bondput | A dummy variable that equals 1 if there's put provision, and 0 otherwise |
| Bondcall | A dummy variable that equals 1 if there's call provision, and 0 otherwise |
| Bondsecu | A dummy variable that equals 1 if the bond is secured, and 0 otherwise |
| Firmsize | The natural logarithm of the issuer's total assets |
| Lev | The ratio of total liabilities to total assets of the issuer |
| Growth | The annual percentage change in the issuer's operating income from year t to year t−1 |
| ROA | The ratio of net income to total assets |
| Cover | The ratio of net operating cash flow to interest expense |
| Tangibility | The ratio of tangible assets to total assets |
| Current | The ratio of current assets to current liabilities |
| Big4 | A dummy variable that equals 1 for Big 4 clients, and 0 otherwise |
| SOE | A dummy variable that equals 1 if the controlling shareholder is a government agency, and 0 otherwise |
| Top1 | The proportion of shares owned by the largest stockholder of the firm |
| Issuenum | The number of bonds issued at the issuance date at city level |
| CorpRate | The ordered value of firm's rating. (BBB = 1, BBB+ = 2, A− = 3, A = 4, A+ = 5, AA− = 6, AA = 7, AA+ = 8, AAA− = 9, AAA = 10) |
| GDPg | The growth rate of regional GDP |
| Variable | Definition |
|---|---|
| Yield to maturity on the bond issuance date minus the yield to maturity on a treasury bond of similar maturity | |
| A dummy variable that equals 1 on the dates after bankruptcy courts were established and 0 otherwise. For bonds whose issuers are located in cities with no bankruptcy court, Post equals 0 all the time | |
| The natural logarithm of bond offering amount | |
| The natural logarithm of bond duration in years | |
| The ordered value of bond's credit rating (A−1 = 1, AA− = 2, AA = 3, AA+ = 4 and AAA = 5) | |
| A dummy variable that equals 1 if there's put provision, and 0 otherwise | |
| A dummy variable that equals 1 if there's call provision, and 0 otherwise | |
| A dummy variable that equals 1 if the bond is secured, and 0 otherwise | |
| The natural logarithm of the issuer's total assets | |
| The ratio of total liabilities to total assets of the issuer | |
| The annual percentage change in the issuer's operating income from year | |
| The ratio of net income to total assets | |
| The ratio of net operating cash flow to interest expense | |
| The ratio of tangible assets to total assets | |
| The ratio of current assets to current liabilities | |
| A dummy variable that equals 1 for Big 4 clients, and 0 otherwise | |
| A dummy variable that equals 1 if the controlling shareholder is a government agency, and 0 otherwise | |
| The proportion of shares owned by the largest stockholder of the firm | |
| The number of bonds issued at the issuance date at city level | |
| The ordered value of firm's rating. (BBB = 1, BBB+ = 2, A− = 3, A = 4, A+ = 5, AA− = 6, AA = 7, AA+ = 8, AAA− = 9, AAA = 10) | |
| The growth rate of regional GDP |
Note(s): This table describes definitions of variables in model 1
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