Transportation Infrastructure, Information Production, and Capital Markets∗

Transportation infrastructure facilities the travel of people and enhances information production in capital markets. After being connected to high-speed rail in China, firms experience increased site visits and other information-production activities from institutional investors, media, and analysts. These firms also increase information production by providing more frequent managerial forecasts and reducing earnings management. Stock prices, the aggregator of all information, become more informative and less prone to crashes. These informational effects of high-speed rail connections are independent from the effects of firm performance or local economic development. A severe high-speed-rail accident caused by a lightning strike allows us to observe the counterfactuals and further confirm causality.