The Impact Of High-speed Rail On IPO Underpricing

China’s stock market has continuously improved its institutional system and market structure in the recent three decades.However,price distortion in the new share issuance market is still relatively serious,and the IPO underpricing problem still exists.Many scholars generally believed that the main reason for the IPO underpricing was led by information asymmetry and geographical distance could have strong influence on information asymmetry.While truly geographical distance cannot be shortened,emerging means of transportation can play a similar role in "spatial compression".How to solve the problem of underpricing and improve the degree of China’s financial marketization,the developing high-speed rail industry may give the answer.Therefore,the study of the impact of high-speed rail on IPO underpricing has important theoretical and practical significance at present.This paper innovatively combined infrastructure and financial markets to analyze,examining the impact of high-speed rail on IPO underpricing.We firstly selected all the enterprises listed on the growth enterprise market(GEM)since 2009 as a sample,used the difference-in-difference model to do empirical research.After study,we concluded that when there were direct high-speed rail lines connecting the city of the enterprise and the three major financial centers,the IPO underpricing rate of the enterprise would be lower.It could be explained from the perspective of “soft information”.When transportation was convenient,investors could communicate with the enterprise faceto-face and obtained the necessary soft information,which would reduce the information asymmetry degree and then led to low IPO underpricing rate.Further,by setting adjusting variables,this paper found that when the distance between the location of the enterprise and the financial center was within 400 kilometers,the impact of highspeed rail would be stronger.It is because the high-speed rail always played the function of connecting those cities nearby to form a metropolitan circle,which facilitated information communication between investors and enterprises.We also found that when the company’s operating uncertainty was high,the impact of high-speed rail on IPO underpricing would be stronger,because in this situation,those investors’ grasp of the company’s operating conditions was weak and they relied more on face-to-face communication with management to enhance their understanding of the company.During the study,this paper always paid attention to the reliability of the results,on the one hand,we did the parallel trend test to verify the rationality of the sample selection,on the other hand,we replaced the explanatory variables and samples to ensure the robustness of the conclusions.After showing conclusion,this paper suggested that relevant departments should further accelerate the construction of high-speed rail lines,expand the coverage of highspeed rail,and consider multiple factors in the location of high-speed rail stations.The high-speed rail should have the greatest positive impact on economic entities along the line and those enterprises in remote areas should also enjoy the benefits brought by high-speed rail in order to improve the unbalanced economic development problem among various regions in China.At the same time,this article also believed that the experience of China’s high-speed rail industry was worth exporting to other developing countries.China kept advocating the "Belt and Road" to help the railway construction of neighboring countries,and this cause would be still meaningful in the future.