data_EMFT.rar

As a direct financing platform, the bond market serves as a crucial component of the multi-tiered capital market, and its significance is increasingly pronounced in China. Considering that accounting information disclosure is very important for comprehensive implementation of the registration system reform for security offering, we explore the cash flow manipulation prior to bond issuance and its transmissible effect driven by credit rating purchase motivation. The empirical results indicate that listed companies significantly increase the degree of operating cash flow manipulation for higher credit ratings to facilitate bond issuance, which primarily manifests in the issuer-paid model. Related analysts are also found to release more optimistic cash flow forecasts before the bond issuing for catering. The phenomenon weakens the negative correlation between credit rating levels and bond spreads, indicating that the cash flow manipulation by bond-issuing listed companies can transmit, thereby influence the efficacy of the bond market. Further analysis reveals the followings: (1) Companies with more deposits and loans exhibit a significantly stronger degree of cash flow manipulation for higher credit ratings, and their probability of subsequent semi-annual cash stock reversal is notably increased. (2) Listed companies that default on bonds demonstrate significantly stronger cash flow manipulation in the year preceding the bond issuance, indicating that cash flow manipulation for higher credit ratings exacerbates bond defaults. These results highlight the impact of the motivation of credit rating purchase on the quality of cash flow information disclosure by bond issuers, which transmits and has a lagged effect, further intensifying bond defaults. Consequently, the study provides empirical evidence for the oversight of cash flow information disclosure and the improvement of its quality of listed companies.