On-the-spot Investigation Of The Opening Of High-speed Rail And Institutional Investors

With the construction of high-speed railway in our country,the accessibility of cities has been improved substantially.The opening of the high-speed railway speed up the mobility of capital,information,technology,labor and other elements,which promotes the economic development and changes economic spatial structure.Due to high-speed railway opening,the compress of the space-time distance decrease the cost of investors getting information and the flow of information improve companies’ information environment.Information always play a important role in capital market.Besides the public information from listed company announcements,individual and institutional investors can carry out site visit to get private information.Through site visit,investors can observe business operations of the companies directly,which will make private information reliable.The high-speed railway opening caters to the demand of institutional investors such as securities and funds for site visit.The information from site visit may also influence investment decisions.Hence,this paper will test whether the high-speed railway opening impact site visit by institutional investors.This paper treats the opening of high-speed railway as a quasi-natural experiment,using the panel data of listed companies in Shenzhen Stock Exchange during 2007 to 2015.By dividing the data into treated group and control group,the paper use the difference in difference model to estimate the impact of high-speed railway opening on site visit to listed company by institutional investors and discuss the impacts on companies in different areas,types and profitability.What’s more,the paper estimates how high-speed railway opening influences the institutional investors’ shareholding ratio on the basis of site visit.Firstly,this paper uses the number of site visit to listed companies by institutional investors as dependent variable and build a difference in difference model.The result shows that the high-speed railway opening increase the number of site visit,which indicates that high-speed railway facilitates institutional investors’ access to private information and decrease the cost of information.Considering that listed companies will disclose the site visit information timely,more information can be known by capital market and the companies’ information transparency can be improved.Secondly,in group-level regression,following results have been reached.In terms of area,high-speed railway opening increase the number of site visit to listed companies in East China,but not significant increase that in Middle and West China.As the economically developed areas,there are more valuable companies in East China that cater to the demand of institutional investors.For the companies in other aeras,it is likely that the cost of site visit is still higher than the benefit of that or the effect of high-speed railway opening has not been appeared.In terms of type,high-speed railway opening increase the number of site visit to state-owned companies,which indicates that institutional investors would rather to get more information of state-owned companies.The high-speed railway opening can also promote state-owned companies’ disclosure of information and improve the information environment.In terms of profitability,high-speed railway opening increase the number of site visit to companies with good profitability.Institutional investors prefer high-quality companies other than low-quality companies.Good companies are easier to be found with the help of highspeed railway opening.Thirdly,this paper uses institutional investors’ shareholding ratio to listed companies as dependent variable and build a another difference in difference model.The result shows that high-speed railway opening increase the institutional investors’ shareholding ratio,which is more significant for companies with good profitability.Hence,high-speed railway opening help institutional investors to find valuable companies and then make investment decision.In other words,the mechanism of selecting the superior and eliminating the inferior is accelerated by the high-speed railway opening.The significance of the paper is that considering the convenience of high-speed railway opening I test how the convenience impact the information environment of the listed companies.Furthermore,I study the process of getting information and using the information to make investment decision under the influence of high-speed railway opening,which enrich the research between high-speed railway construction and microeconomic.For policy recommendations,this paper suggest that the government should increase the investment of high-speed railways especially that in West and Middle China to attract investors.It will speed up the flow of information and be convenient to get information.Listed companies should enhance their own strength and improve the quality of information disclosure,so as to benefit from the flow of information and capital brought by the high-speed railway opening.Institutional investors should play a role in improve information environment,value discovery and market stabilization.Financial should standardize site visits by institutional investors and prevent them from receiving material nonpublic information to make private the information transfer to the capital market effectively.