Abstract The high-quality development of China's economy depends on the benign interaction between the local government and the market, so it is very important to investigate the role of local government behavioral factors in the bond market. Based on the data of Chinese credit bond market and officials' turnover, this paper studies whether officials' turnover will break the original political connection and thus affect the default of bonds. The results show that the change of local government officials will lead to an increase in the default rate of the bond market, and this effect is mainly affected by non-state-owned enterprises, especially in areas where officials have a longer term of office, less transparency and a poor business environment. It reveals that there is government cover-up behavior in China's bond market. Further study indicates that in the default samples, the officials' turnover will increase the short-term solvency and profitability of the default enterprises, indicating that the original relationship between government and enterprises may make some enterprises with poor financial quality stay in the bond market. This paper provides an empirical evidence for China to guard against financial risks indeepening financial supply-side structural reform.
2022, Vol. 39 
