Expanding Footprints: The Impact of Passenger Transportation on Corporate Locations

61 Pages Posted: 11 Jul 2019 Last revised: 30 Apr 2020

See all articles by Yatang Lin

Yatang Lin

Hong Kong University of Science & Technology (HKUST)

Yu Qin

National University of Singapore (NUS) - Department of Real Estate

Johan Sulaeman

National University of Singapore (NUS) - Department of Finance

Jubo Yan

Nanyang Technological University - School of Social Sciences

Jialiang Zhang

Peking University - National School of Development

Date Written: April 30, 2020

Abstract

This paper investigates how transportation networks shape firms’ geographic footprint by
reducing information asymmetry associated with distant investments. Exploiting the staggered
expansions of China’s passenger high-speed rail (HSR) network, we document that the amount
of intercity investment between a pair of cities increases by 45% with the introduction of an
HSR line connecting them. We enhance the causal inference by applying high-dimensional
fixed effects, and focusing on non-nodal city pairs that are “accidentally” connected when two
different parts of the HSR network are connected. Consistent with the monitoring hypothesis,
we observe the strongest effect for controlling stakes in large investments.

Keywords: High-speed rail, geographic footprint, home bias, investment flows

JEL Classification: D25, G32, H54, L22, R41

Suggested Citation

Lin, Yatang and Qin, Yu and Sulaeman, Johan and Yan, Jubo and Zhang, Jialiang, Expanding Footprints: The Impact of Passenger Transportation on Corporate Locations (April 30, 2020). Available at SSRN: https://ssrn.com/abstract=3418227 or http://dx.doi.org/10.2139/ssrn.3418227

Yatang Lin

Hong Kong University of Science & Technology (HKUST) ( email )

Clearwater Bay
Kowloon, 999999
Hong Kong

Yu Qin

National University of Singapore (NUS) - Department of Real Estate ( email )

4 Architecture Drive
Singapore 117566
Singapore

Johan Sulaeman (Contact Author)

National University of Singapore (NUS) - Department of Finance ( email )

Mochtar Riady Building
15 Kent Ridge Drive
Singapore, 119245
Singapore

HOME PAGE: http://sites.google.com/site/johansulaeman/

Jubo Yan

Nanyang Technological University - School of Social Sciences ( email )

HSS 04-68, 14 Nanyang Drive
Singapore, 639798
Singapore

HOME PAGE: http://juboyan.weebly.com

Jialiang Zhang

Peking University - National School of Development ( email )

No. 5 Yiheyuan Road
Haidian District
Beijing, Beijing 100871
China

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