 High-Speed Rail Launch: A Natural Experiment on Geographic Location and Cash DividendsGang Zhao, Shangkun Liang, Jindan Zhang and Joseph H. Zhang Pacific-Basin Finance Journal, 2024, vol. 83, issue C Abstract: This paper examines the impact of geographic location and high-speed rail (HSR) launch on the capital market efficiency in terms of cash dividend payouts. A firm's geographic location reflects the degree of information asymmetry, and HSR launch improves information dissemination. Using a sample of China's public firms, we find that the launch of HSR significantly reduces the cash dividends in firms located in neighboring cities along the HSR line. This effect is more pronounced in firms experiencing agency issues, especially those operating in complex businesses, audited by small auditors, state-owned enterprises, and those characterized by greater free cash flow and fewer investment prospects. Further analysis shows that the suppression of cash dividends accompanied by the launch of HSR only exists before implementing the mandatory dividend policy. The results indicate that the launch of HSR alleviates information asymmetry between external investors and managers, reduces agency costs, and improves stock market efficiency. Keywords: Geographic location; High-speed rail; Cash dividends; Information asymmetry; Agency cost (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:83:y:2024:i:c:s0927538x23002858 DOI: 10.1016/j.pacfin.2023.102214 Access Statistics for this article Pacific-Basin Finance Journal is currently edited by K. Chan and S. Ghon Rhee More articles in Pacific-Basin Finance Journal from Elsevier |
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