Time Distance and Mutual Fund Holding Horizon: Evidence from a Quasi-Natural Experiment Setting of High-Speed Railway Opening

51 Pages Posted: 5 Dec 2019

See all articles by Qiliang Liu

Qiliang Liu

Wuhan University - School of Economics and Management

li Tian

Department of Accountancy, City University of Hong Kong;School of Management, Huazhong University of Science &Technology

Junbo Wang

Dept. of Economics and Finance, City Univ. of HK

Date Written: April 1, 2018

Abstract

Using a quasi-natural experiment setting of high-speed railway opening, we examine whether mutual fund holding horizon changes after the time distance between mutual funds and listed companies is shortened following the opening of high-speed railway. With the DID (difference-in-difference) method, we find that the holdings of mutual fund in remote listed companies increase following high-speed railway opening of remote cities in which these listed companies are located. We also find that this effect is mainly reflected in the high-speed railway transportation optimal interval (i.e. physical distance between 240 and 1800 kilometers), and this effect is stronger for companies with lower analyst coverage. We further find that the opening of high-speed railway facilitates the site visits of mutual funds to remote listed companies, which will eventually increase mutual fund holdings and extend mutual fund holding horizon.

Keywords: time distance; mutual fund holdings; site visit

JEL Classification: G11, R42, G23

Suggested Citation

Liu, Qiliang and TIAN, li and Wang, Junbo, Time Distance and Mutual Fund Holding Horizon: Evidence from a Quasi-Natural Experiment Setting of High-Speed Railway Opening (April 1, 2018). Available at SSRN: https://ssrn.com/abstract=3490445 or http://dx.doi.org/10.2139/ssrn.3490445

Qiliang Liu

Wuhan University - School of Economics and Management ( email )

Wu Han, Hu-Bai 430072
China

Li TIAN (Contact Author)

Department of Accountancy, City University of Hong Kong;School of Management, Huazhong University of Science &Technology ( email )

Junbo Wang

Dept. of Economics and Finance, City Univ. of HK ( email )

83 Tat Chee Ave., Kowloon Tong
Kowloon Town
Kowloon, 220
Hong Kong
34429492 (Phone)
852-2788-8806 (Fax)

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