High-speed railway and corporate risk-taking: Channels and evidence from China

This study examines the impact of HSR, which is a green mode of transportation, on corporate risk-taking using the introduction of HSR in China as an exogenous shock. We find that the introduction of an HSR route leads to a significant increase in corporate risk-taking. The positive effect of HSR introduction on corporate risk-taking is more pronounced for firms with more severe financial constraints, poorer access to human capital, and lower information accessibility. These results show that HSR promotes corporate risk-taking through the channels of cross-regional resource provision of funds, personnel, and information essential for corporate risk-taking. In addition, tests considering spatial heterogeneity show that the positive relation is also stronger for firms located in small cities where resources are inadequate. Results also show that HSR increases the riskiness of corporate financing and investment policies, and leads to a boost in corporate green investment.