SOCIAL TRUST ENVIRONMENT, AUDITORS' INDUSTRY EXPERTISE AND BOND CREDIT RATINGS

This paper takes the corporate bond credit ratings of Chinese A-share listed companies from 2008 to 2019 as the object of study. Based on information asymmetry theory, it studies the influence of auditors' industry expertise on corporate bond credit ratings at the levels of accounting firms and individual auditors. The empirical analysis shows that the higher the auditors' industry expertise level is, the higher the corporate bond credit rating will be. Furthermore, the higher the social trust environment is, the higher the bond credit rating will be. Additionally, compared with regions with a good social trust environment, regions with a poor social trust environment have a more significant impact on bond credit ratings via auditors' industry expertise. These conclusions were tested by changing the measures of bond credit ratings, the social trust environment and auditors' industry expertise and remain robust. In other words, auditors' industry expertise plays an external governance role that is conducive to alleviating internal and external information asymmetry, reducing default risk, and improving bond credit ratings.