Geographic proximity and corporate investment efficiency: Evidence from high-speed rail construction in China

Yizhong Wu, Chien-Chiang Lee (), Chi-Chuan Lee and Diyun Peng

Journal of Banking & Finance, 2022, vol. 140, issue C

Abstract: Applying the difference-in-differences method, we show that high-speed rail (HSR) construction improves investment efficiency in China. The effect is more pronounced for companies with low information transparency and low media coverage, suggesting that HSR can mitigate information asymmetry while reducing external regulatory costs. Our analysis also shows that the effect is more powerful for non-state-owned enterprises, high-growth firms, and those companies located in core cities. Overall, our findings suggest that HSR can improve investment efficiency by shortening the travel time between firms and their investors.

Keywords: Geographic proximity; Information asymmetry; Investment efficiency; High-speed rail; China (search for similar items in EconPapers)
JEL-codes: D22 G30 G32 G34 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (99)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:140:y:2022:i:c:s0378426622001066

DOI: 10.1016/j.jbankfin.2022.106510

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