Research on Bond Participants' Emotion Reactions Toward the Internet News in China's Bond Market

The literature has widely studied the market response to the financial news or events but mainly focused on the stock market. This article associates the concept of internet news with the bond market response and attempts to examine how credit rating agencies (CRAs) and bond investors, two important bond participants, react to financial news on the internet with a range of multiply regressions. Our empirical study leads to several findings. First, CRAs tend to ignore the warnings of financial news on the internet, whereas bond investors strongly react to such news. Second, there is an asymmetry in bond investors' reactions to good news compared to bad news, with investors being more sensitive to bad news. Third, there is heterogeneity in the psychological reaction where bond investors do not react to the news about central state-owned enterprises (SOEs) but to the news about other enterprises. Finally, there is an asymmetric response driven by news timeliness that bond investors are more sensitive to the latest news articles than old ones. Overall, our study confirms the existence of psychological reactions to the financial news on the internet in China's bond market, which has significance for keeping bond market participants from overreacting or underreacting to market news.

Automated summary

This study examines the market response to financial news on the internet in China's bond market, with a focus on the reactions of credit rating agencies and bond investors. The findings suggest that there are differences in reactions between CRAs and bond investors, with investors being more sensitive to emotion and timeliness of news.