The certification effect of government tender procurements: evidence from the cost of debt
Abstract
Using a sample of government tender procurement (GTP) data in China, we document that firms with GTPs have a lower cost of debt. We hypothesize that when a firm has GTPs, it conveys positive signals to creditors to reduce the cost of debt. Additional analysis shows that the effect is more salient for firms with first‒time and non‒local GTPs, with non‒big 4 auditors, and small size. Our study contributes to the literature by establishing GTP as a credible certification mechanism that lowers debt financing costs. We advance the theoretical understanding of government – business relationships through framing GTP as a credible signal.
Fields of Study & Subjects
Corporate Finance and Governance
Auditing
Earnings Management
Governance
Credit Risk and Financial Regulations
Publication details
- Journal / source
- Asia-Pacific Journal of Accounting & Economics
- Volume
- 33
- Issue
- 3
- Pages
- 529–550
- Publication date
- 16 March 2026
- Language
- EN