Patient Capital, Accounting Information Disclosure Quality, and the Cost of Debt Financing

This paper examines whether patient capital is associated with lower debt financing costs and whether accounting information disclosure quality strengthens this association. Using 23,124 firm-year observations of non-financial Chinese A-share listed firms from 2012 to 2024, we construct a multidimensional patient-capital index combining investor horizon, institutional ownership stability, short-term financing pressure, equity growth retention, and managerial short-termism measured from MD&A text. The cost of debt is proxied by financial expenses divided by total liabilities. Two-way fixed-effects estimates show a negative association between patient capital and debt financing costs, and the result remains stable across alternative variable definitions, lagged specifications, sample exclusions, and supplementary 2SLS and GMM estimations. Channel tests are consistent with three potential pathways: stronger market power, lower operating cost ratios, and lower financial risk. Using stock-exchange disclosure ratings, we find a negative and significant interaction between patient capital and disclosure quality, indicating that higher-quality disclosure strengthens the negative association between patient capital and debt costs. Subsample estimates are statistically significant only for eastern-region, technology-intensive, profitable, and smaller firms. The findings suggest that long-horizon capital and credible disclosure can operate as complementary signals in creditor assessment: patient capital conveys a long-term orientation, while higher-quality disclosure improves the verifiability of that signal.