China High-speed Railways And The Cost Of Debt Financing

In recent years,China’s high-speed railway(HSR)has developed rapidly.With the characteristics of high efficiency,convenience and punctuality,HSR can reduce people’s travel cost and time cost,change people’s concept of space and time,and promote the flow of capital,information and talent.In this paper,the exogenous impact of the opening of HSR in various prefecture-level cities in China is used to investigate how it affects the debt financing costs of listed companies.After the opening of HSR,creditors,analysts,auditors,institutional investors and other stakeholders can more easily and frequently conduct field research on listed companies,which can increase the quality of hard information such as financial information and the acquisition of soft information.Thus,the opening of HSR can improve the information transparency of listed companies and reduce the degree of information asymmetry between listed companies and creditors,which can lead to a decrease in motivation of creditors to carry out price protection.This paper uses the difference-in-differences approach to study the impact of HSR opening on debt financing costs.The results of the study show that the opening of the HSR significantly reduces the debt financing costs of listed companies in cities along the route.The increasing frequency of field visits and research for listed companies and the improvement of information transparency of listed companies are important channels for HSR opening to reduce debt financing costs.Further,the effect of HSR opening on debt financing costs is most pronounced for non-state listed companies,the smaller listed companies and listed companies with higher executive shareholdings.Further analysis shows that the reduction of debt financing costs brought by the opening of HSR improves the investment efficiency of listed companies.Three robustness tests including parallel trend test,placebo test,and rematching control group using propensity score matching(PSM),are used to enhance the reliability of this study.The conclusions in this paper provide empirical evidence for the information transmission effect of HSR in the financial market and the impact of transportation infrastructure construction on the capital market.