The Impact Of The Opening Of High-speed Rail On Firms' Resource Allocation

As an important factor of factors flow and trading activities,as well as an main source of information asymmetry and supervising cost,geographic distance has a profound impact on firms' resource allocation.Specifically,firstly,according to geoeconomy theory,transaction costs have "distance attenuation effect",that is,the closer the geographical distance between different economic entities,the lower transaction costs will be,and the higher the transaction cost conversely.In fact,the higher transaction cost will hinder factors flow and firms' transaction,thus hindering firms' to adjustment their resource allocation.Second,the geographic distance is the main source of information asymmetry,long distance among economic entities isn't conducive to their intensive relation and information acquisition,especially for the acquisition of "soft information" and implicit knowledge,thereby weakening firms' ability to acquire or to dispose various factors,and further hindering firms to adjustment their resource allocation.Finally,geographical distance will reduce people's desire to travel,thus weakening stakeholders' supervision to firms,causing or facilitating firms' agency problem,which is also not conducive to the optimization firms' resource allocation.The construction of transportation infrastructure can compress the spatial and temporal distance,which can not only reduce transaction costs,but also reduce the barriers of factor flow caused by geographical distance.Moreover,it can promote the exchange between economic subjects which located in different regions,thus improving their ability to obtain information and alleviating information asymmetry and agency problem.As a new means of transportation,high-speed rail has achieved rapid development since the opening of the Chinese first self-developed high-speed rail in 2008.It has realized the leapfrog development from scratch to introduction and from absorption to independent creation,and finally leading the world.It is those features that high-speed,convenient,on-time,comfortable,eco-friendly and so on make highspeed rail goes into People's daily life,and becoming the first choice of many travelers.Therefore,based on the natural experiment of the opening of high-speed rail,this paper investigates the impact of transportation infrastructure construction on firms' resource allocation.First of all,the Central Economic Work Conference held in December 2015 proposed five priority tasks,which are "cutting overcapacity,de-stocking,deleveraging,reducing costs and improving weak links"."De-leveraging" has become the emphasis of supply-side reform and the emphasis of China's economic work.In essence,de-leveraging is downward adjust firms' capital structure.But it is noteworthy that deleveraging does not mean that the lower the corporate leverage ratio the better.Deleveraging blindly may be biased.In response,at both the first meeting of the Financial and Economic Commission of the CPC Central Committee and the Government Work Report in 2019,Chairman Xi Jinping proposed the idea of "structural de-leveraging",which means that different requirements will be set for different departments and different types of debt in the deleveraging process.However,it is difficult for corporates to adjust their capital structure in time due to the constraints of financial repression and financial market friction and firms' agent problem,which leads to the phenomenon that the actual capital structure deviates from the target capital structure.The opening of high-speed rail can not only alleviate the information asymmetry among different economic entities and firms' agent problem,improving the availability of corporate financing and firms' ability to adjust their capital structure,so as to accelerate the dynamic adjustment of firms' capital structure.On the other hand,the opening of highspeed rail can strength firms' supervision,thus reducing managers' opportunistic behaviors caused by their self-interest motivation,and improving their willingness to adjust firms' capital structure and ultimately optimizing firms' capital structure.Therefore,this paper examines the impact of the opening of high-speed rail on the dynamic adjustment of firms' capital structure from the perspective of corporate leverage allocation.Secondly,corporate financing is to meet the needs to capital in the process of investment and daily operation.According to the principle of "maturity matching of investment and financing",the maturity of corporate debt should match the maturity of its assets,so as to prevent the risk that the cash flow generated by investment is not enough to pay the interest and mature debt,and at the same time reduce firms' financing cost,avoiding paying interest for the unmatured debts after asset retirement.However,in reality,due to the lack of long-term capital and its high cost,"short-term loans for long-term investment" is widespread in enterprises.On the one hand,the opening of high-speed rail can alleviate firms' information asymmetry and agency problems,thus reducing the information risk and credit risk of capital providers,and improving their willingness to provide funds for firms and alleviating the phenomenon in firms that "short-term loans for long-term investment".On the other hand,the opening of highspeed rail provides more investment opportunities to firms,thus increasing firms' demand for long-term capital.Although the information effects and supervise effects of the opening of high-speed rail can alleviate firms' financing constraints,but it is that banks' limited ability to provide long-term loans for firms and firms' growing debtpaying ability and their claim for reducing financing cost makes firms tend to use the short-term debt to meet the demand of long-term investment,finally exacerbating the phenomenon of "short-term loans for long-term investment".In conclusion,the opening of high-speed rail may either inhibit or aggravate the "short-term loans for long-term investment".What kind of result could it produce depends on empirical test.In this regard,this paper investigates the impact of the opening of high-speed rail on "shortterm loans for long-term investment" from the perspective of maturity matching of investment and financing funds.Finally,as an important task of supply-side reform,"reducing costs" is directly related to the survival and development of enterprises.Especially under the dual impact of COVID-19 and trade war,reducing costs has become an important means to maintain the survival of enterprises.The opening of high-speed rail can promote the flow of various factors in different regions and reduce the transaction costs among economic entities,thus facilitating corporates to adjust their resource allocation according to their actual needs in time.At the same time,the opening of high-speed rail also strengthen the supervision of firms' stakeholders,thus constraining firms' opportunistic behaviors,and promoting firms to optimizing their resources allocation,and ultimately improving their cost management efficiency.Cost stickiness reflects firms' resource allocation behaviors to some extent,which provides an opportunity to investigate firms' cost management.Based on this,this paper investigates the impact of the opening of highspeed rail on firms' cost stickiness from the perspective of how corporates adjust their resource allocation when business volume increases or reduces.Considering the above analysis,this paper is based on the existing literature,and is guided by the information asymmetry theory,resource allocation theory,capital structure theory and maturity matching theory of investment and financing;and investigates the impact and specific influential mechanism of the opening of high-speed rail on the dynamic adjustment of firms' capital structure,"short-term loans for longterm investment",as well as cost stickiness by setting staggered DID model according to the opening time of high-speed rail of the cities which firms located in.The findings are as follows:First,the study about the impact of the opening of high-speed rail on the dynamic adjustment of firms' capital structure finds that:(1)the opening of high-speed rail promotes the dynamic adjustment of capital structure.(2)The promoting effect of the opening of high-speed rail on the adjustment of firms' capital structure exists in the both samples where the actual capital structure is lower than the target capital structure and need to add leverage and where the actual capital structure is higher than the target capital structure and need to decrease leverage,and mainly realized by adjusting interest-bearing liabilities rather than net equity.(3)The promoting effect of the opening of high-speed rail on the dynamic adjustment of firms' capital structure mainly exists in those firms with low information transparency,serious agency problems and greater financing constraints.It also finds that the more accessible the high-speed rail,the more can promote the dynamic adjustment of firms' capital structure.Second,the study about the impact of the opening of high-speed rail on firms' “short-term loans for long-term investment” finds that :(1)the opening of high-speed rail could strengthen the phenomenon of “short-term loans for long-term investment”.(2)However,it does not increase firms' risk,but reduce firms' financing cost and improve firms' short-term performance and long-term performance,which indicates that the aggravation of “short-term loans for long-term investment” after the opening of high-speed rail is an active choice of enterprises which is aimed to seize the investment opportunities and reduce financing costs.(3)The strengthen effect of the opening of high-speed rail on “short-term loans for long-term investment” mainly exists in those firms whose managers have optimistic expectations,located in the cities with lower level of financial development and poor traffic conditions.Thirdly,the study about the impact of high-speed rail on firms' cost stickiness finds that:(1)the opening of high-speed rail can significantly decrease firms' cost stickiness.(2)On the one hand,the opening of high-speed can improve regional market access,passenger volume and freight volume,decrease firms' resource adjustment costs,thus weakening firms' stickiness cost.On the other hand,the opening of high-speed can be convenient for people to travel,increasing the shareholding ratio of institutional investors and analysts' attention and site visits,which could restrict managers' opportunistic behaviors and ultimately weaken firms' cost stickiness.(3)The impact of the opening of high-speed rail on firms' cost stickiness mainly exists in those firms with higher adjustment cost,serious agency problems,located in cities with poor traffic conditions.It is also found that the more accessible the high-speed rail,the more decrease in firms' cost stickiness.Possible innovations of this paper are as follows:First,it enriches the research on the economic consequences of the opening of high-speed rail from the perspective of resource allocation.Existing literature mainly investigate the macro impacts of the opening of high-speed rail on the regional innovation and economic development,industrial layout,population and employment,ecological environment etc.,and discusses the micro impacts on analysts,auditors,venture investors,banks and other intermediary subjects' behavior,as well as on firms' investment,procurement,innovation,production,sales and so on.However,there are few literatures to discuss the micro effects of the opening of high-speed rail from the perspective of firms' resource allocation.This paper discusses the impact of the opening of high-speed rail on firms' leverage allocation(the dynamic adjustment of capital structure),maturity matching of investment and financing funds("short-term loan for long-term investment")and resource allocation adjustment when business volume increases and decreases(cost stickiness),enriching the research on the micro economic consequences of high-speed rail.Second,it enriches the research on the dynamic adjustment of capital structure,"short-term loan for long-term investment" and cost stickiness from the perspective of geoeconomics.The existing literature discusses the influencing factors of the dynamic adjustment of capital structure from the perspectives of macroeconomic policy,financial market environment,legal environment,product market competition,media reports and company characteristics;and discusses the influencing factors of "shortterm loan for long-term investment" from the perspectives of financing cost,the appropriate level of monetary policy,the structure of financial market and interest rate,regulation about interest rate and bank,the combination of industry and finance,the ability of managers and so on;and discusses the influencing factors of cost stickiness from the perspectives of the development of regional factor market,laws and regulations on the labor protection,the fluctuation of monetary policy,customer concentration,internal and external institution,governance and intermediary and so on.Based on this,this paper includes transportation accessibility into the research system of the dynamic adjustment of firms' capital structure,"short-term loan for long-term investment" and cost stickiness,enriching the research on the influencing factors of dynamic adjustment of capital structure,"short-term loan for long-term investment" and cost stickiness.Finally,the conclusions of this paper also have some practical values.Specifically,under the social circumstance of "cutting overcapacity,de-stocking,de-leveraging,reducing costs and improving weak links" and "guarding against and defusing major risk",this article investigates the impacts of traffic infrastructure construction on the dynamic adjustment of capital structure,"short-term loan for long-term investment" and cost stickiness based on the natural experiment of the opening of high-speed rail,and finds that the opening of high-speed rail could accelerate the dynamic adjustment of capital structure,improving the utilization efficiency of firms' leverage,which provides some theoretical guidance for us to solve the firms' current difficulties in capital turnover and realize "structural deleveraging" by constructing traffic infrastructure.Meanwhile,this paper also finds that the opening of high-speed rail could strengthen the phenomena of “short-term loans for long-term investment”,while it does not increase firms' risk,but reduce firms' financing cost and improve firms' short-term and long-term performance,which enlightens us to make a difference between the phenomenon of “short-term loans for long-term investment” under different circumstance,and to understand and evaluate the rationality of the maturity matching between investment and financing according to firms' management environment and financing environment,but not blindly view all the phenomena of“short-term loans for long-term investment” are bad.More importantly,we should improve and perfect the financial system,strengthen the role of the financial sector in serving the real economy,and provide firms with funds commensurate with their investment duration and investment risks.In addition,this paper also finds that the opening of high-speed rail could weaken firms' cost stickiness and improve firms' cost management efficiency.These findings provide some references for us to evaluate the economic value and social value of the large-scale construction in high-speed rail in China correctly.It also provides some theoretical guidances for the further layout of high-speed rail even other transportation infrastructure construction in China.