High-Speed Railway Opening and Corporate Fraud

Chen Wang, Jack Strauss and Lei Zheng
Additional contact information
Chen Wang: School of Economics and Management, Beijing Jiaotong University, Beijing 100044, China
Jack Strauss: Reiman School of Finance, University of Denver, 2101 S. University Blvd, Denver, CO 80208, USA
Lei Zheng: School of Economics and Management, Beijing Jiaotong University, Beijing 100044, China

Sustainability, 2021, vol. 13, issue 23, 1-23

Abstract: The impact of high-speed railway (HSR) on corporate behavior has recently attracted both practical and theoretical interest. In this paper, based on a sample of A-share listed companies from 2007 to 2020 in China, we use a difference-in-difference model to explore the impact of HSR openings on corporate fraud and analyze its mechanism. We find that HSR introduction has several important implications. First, it reduces the tendency and frequency of corporate fraud. Second, HSR opening restrains corporate fraud by improving the external supervision level and reducing the financing constraints of the company. Third, the inhibitory effect of the HSR opening on corporate fraud is significant when the market competition is less intense, and the company’s internal control level is poor. Fourth, after distinguishing types of fraud, HSR opening can still significantly inhibit information disclosure fraud and manager fraud, but not operation fraud. These results indicate that HSR openings promote the flow of information and labor across regions, alleviating the information asymmetry of firms. Our findings are conducive to improving the governance environment of the listed companies, which provides new clues for discovering and restricting corporate fraud.

Keywords: high-speed railway opening; corporate fraud; geographical distance (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.mdpi.com/2071-1050/13/23/13465/pdf (application/pdf)
https://www.mdpi.com/2071-1050/13/23/13465/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:13:y:2021:i:23:p:13465-:d:695766

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().