Does high speed rail enhance financial development?

ABSTRACT

We investigate the impact of high-speed rail (HSR) opening on analysts information-gathering. Our findings suggest that the number of site visits by analysts and the number of analysts involved in the site visits increase significantly after the opening of HSR in the cities in which the listed firms are located. Additional analysis suggests that firms located in HSR cities experience increase in liquidity and decrease in earnings management. Hence, the spatiotemporal squeezing effect generated by HSR opening significantly improves the accessibility of the local firms, reduces the information-gathering costs of analysts, increases the willingness of analysts to conduct site visits, and accelerates the information flow of the listed firms.

KEYWORDS:

• Spatiotemporal squeezing
• high-speed railway
• analyst
• information flow

JEL CLASSIFICATION:

• G14
• D82
• R49

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Funding

Li acknowledges the financial support from the National Natural Science Foundation of China [no. 71872010].