A Study On The Relation Between The Operation Of High Speed Railway And Financial Performance Of Corporations:Evidence From China’s Listed Corporations

The construction and operation of high-speed railways(HSR)with a speed of more than 200 kilometers per hour greatly shortens the time and space distance between regions,and not only brings great economic effects at the macro level such as regional economy and industrial structure,but also has a direct effect in various economic entities at the micro level.This paper explores the impact of the opening of high-speed rail on the performance of listed companies from a micro level.The opening of high-speed rail has optimized the transportation network between regions,which promotes the flow of labor and other factors between regions,thus bringing about the process of polarization and diffusion.In the process,the degree of information asymmetry is alleviated,the production cost of the enterprise can be reduced,so that the financial performance of the enterprise can be improved.Based on the financial data of China’s A-share listed companies between the fourth quarter of 2003 and the second quarter of 2017 and the opening time of the national high-speed rail stations,this paper uses the difference-in-difference approach to discuss the impact of high-speed rail opening on the financial performance of listed companies.The basic regression based on the least squares(OLS)and panel fixed effect(FE)models shows that after controlling the relevant variables,the financial performance of listed companies has the same trend in the first three quarters of the high-speed rail,but the opening of high-speed rail which locates nearby listed companies has a significant positive effect on return on assets and return on equity.Further empirical results show that the opening of the high-speed rail has a more obvious role in promoting the financial performance of listed companies in the secondary and tertiary industries,non-state-owned listed companies,and listed companies which are registered in large cities.To ensure the robustness of the conclusions,this paper was further validated by using the placebo test and the instrumental variable method.In the placebo test,it was assumed that the high-speed rail was opened 0.5 years,1.0 years,and 1.5 years earlier.The results showed that there was no unobservable systematic error to interfere with the estimation results.In the instrumental variable method,after excluding the listed companies which locate in the provincial capital city,the sub-provincial city,and in the municipality,the instrumental variable is generated by the minimum spanning tree method,and the result still shows the consistency with the basic regression.Finally,the paper uses some other definitions of the opening of the high-speed rail to substitute the definition used before,and the empirical results are still robust.With regards to the mechanism of the impact of high-speed rail opening on the financial performance of listed companies,This paper verifies the mechanisms from two aspects: information asymmetry and cost.The empirical data shows that the information transparency of listed companies with high-speed rails nearby tends to be higher than that of listed companies with no high-speed rail nearby.At the same time,the opening of the high-speed rail has a significant positive effect on reducing the inventory of listed companies.The marginal contribution of this paper is mainly summarized in three aspects: First,it provides empirical evidence of China’s economic effects of the opening of the high-speed rail.As an important part of infrastructure construction,the completion and operation of high-speed railway not only brings a large amount of immediate investment,but also profoundly affects the industrial development and urbanization process along the line.The second is to confirm the correctness of the Chinese government’s policy to deal with economic shocks.After the global economic crisis in 2008,the Chinese economy faced enormous challenges.Unlike the direct demand management of the developed economies of Europe and the United States,the Chinese government has initiated large-scale infrastructure construction including high-speed rail construction.This kind of investment statically affects the total demand and provides a strong guarantee for the quality of improvement of the supply side in the future.The third is to provide empirical evidence on the improvement of the performance of listed companies from the micro level.In this paper,the definition of high-speed rail is defined as whether the highspeed rail station is located in a circle with a radius of a certain distance from the listed company,which can accurately depict the area radiated by the high-speed rail.