Expanding Footprints: The Impact of Passenger Transportation on Corporate Locations*

Yatang Lin, Yu Qin, Johan Sulaeman, Jubo Yan and Jialiang Zhang

Review of Finance, 2023, vol. 27, issue 3, 1119-1154

Abstract: This article investigates how transportation networks shape firms’ geographic footprint by reducing monitoring costs of distant investments. Exploiting the staggered expansions of China’s passenger high-speed rail (HSR) network, we document that the amount of intercity investment between a pair of cities increases by 45% with the introduction of an HSR line connecting the cities. We enhance the causal inference by applying high-dimensional fixed effects, and focusing on city pairs that are “accidentally” connected in the network. The HSR effect is the strongest in industries that require on-site monitoring, as well as for controlling stakes in large distant investments.

Keywords: High-speed rail; Home bias; Investment flows; Geographic footprint (search for similar items in EconPapers)
JEL-codes: G14 G34 H54 R42 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (6)

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