Abstract
We study the effects of a direct high-speed rail (HSR) service between two cities on investors and firms in China. We find that, after an HSR introduction, investors make more cross-city searches and block purchases of firms in connected cities. An HSR introduction also leads to less co-movement among local stocks and more co-movement between stocks in connected cities. Firms located in more central cities in the HSR network enjoy higher firm valuation, lower cost of equity, and better liquidity, in part through the channel of increased investor recognition. The HSR effects on valuation, cost of equity, and liquidity are more pronounced among small firms and when the connected city-pair distance is below 1,500 km, for which HSR is faster than flying.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
