Information Super-Railway? Transportation Infrastructure and Information Production in Financial Markets

Posted: 22 Apr 2021 Last revised: 17 Jun 2022

See all articles by Kejing Chen

Kejing Chen

Dongbei University of Finance & Economics

J. Daniel Chi

University of Nevada, Las Vegas (UNLV) - Department of Finance

Wenqi Guo

University of Leeds

Date Written: January 31, 2022

Abstract

When large numbers of people are enabled to travel rapidly around the country, will it affect information production in capital markets? We study a government-directed buildout of high-speed rails (HSR) and find that after being connected to the HSR network, firms experience increased information-production activities from market participants. Stock prices, the aggregator of all information, become more liquid and informative and less prone to crashes. These HSR-induced information effects are independent from the effects of firm performance or economic development. A severe HSR accident caused by a lightning strike allows us to observe the counterfactuals and further confirm causality.

Keywords: transportation infrastructure, information, capital markets, high-speed rail

JEL Classification: G14, G18, H54, O18, R40

Suggested Citation

Chen, Kejing and Chi, Jianxin Daniel and Guo, Wenqi, Information Super-Railway? Transportation Infrastructure and Information Production in Financial Markets (January 31, 2022). Available at SSRN: https://ssrn.com/abstract=3831679 or http://dx.doi.org/10.2139/ssrn.3831679

Kejing Chen

Dongbei University of Finance & Economics ( email )

Dalian
China

Jianxin Daniel Chi (Contact Author)

University of Nevada, Las Vegas (UNLV) - Department of Finance ( email )

4505 S. Maryland Parkway
Box 456008
Las Vegas, NV 89154-6008
United States

HOME PAGE: http://www.unlv.edu/people/jianxin-chi

Wenqi Guo

University of Leeds ( email )

Leeds, LS2 9JT
United Kingdom

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