High-Speed Rail: A Fast Lane for Information Delivery of China’s IPOs

The impact of high-speed rail (HSR) has permeated capital markets and micro entities, attracting much attention from scholars, but there is little evidence of its effectiveness on initial public offering (IPO) in emerging markets. This study exploits a staggered difference-in-differences model and utilizes the level of underpricing to measure the efficiency of China's stock issuance for the purpose of assessing the impact of HSR on the mispricing of IPOs and analyzing how it shapes these effects. The study finds that the opening of HSR significantly decreases IPO underpricing through the information delivery mechanism. The spatiotemporal compression effect brought about by HSR increases the frequency of analyst field visits and media reports. Heterogeneity results show that the alleviating effect is more pronounced in noncentral cities, eastern China, communication-intensive industries, and private firms. This study reveals the role of HSR in information delivery and provides theoretical support for cross-regional information exchange in the capital market.