Transportation Infrastructure and Analyst Earnings Forecasts: Evidence from High-Speed Rails in China

This study examines the effect of high-speed rails on analyst earnings forecasts in Chinese context. The results based on a difference-in-difference design show that the introduction of high-speed rail improves analyst earnings forecast accuracy. The positive association is stronger for firms located in regions with less developed institutional environments, firms with fewer intangible assets, and firms located farther away from information centers. In addition, high-speed rails increase analysts' likelihood and frequency of site visits. Overall, we extend the literature on economic geography and financial analysts, and shed lights on how transportation infrastructure facilitates information exchange in capital markets.