Expanding Footprints: The Impact of Passenger Transportation on Corporate Locations.

This article examines how the expansion of China's passenger high-speed rail (HSR) network influences firms' geographic investment footprints by reducing monitoring and information costs associated with distant investments. Using comprehensive firm registration data from 2004 to 2015 and exploiting staggered introductions of direct and indirect HSR connections between Chinese cities, the study finds that direct HSR links increase the number of intercity investments by 8% and the investment amount by 45%, with significant effects also observed for indirect connections. The analysis shows that reductions in travel time due to HSR facilitate both controlling and non-controlling investments, particularly in industries requiring on-site monitoring and face-to-face communication, and that HSR-induced investments tend to flow toward cities and industries with higher returns on capital, suggesting improved capital allocation efficiency. Robustness checks address concerns about endogenous HSR placement and the role of state-owned enterprises, supporting the conclusion that passenger transportation infrastructure plays a causal role in expanding firms' geographic investment scope and promoting more inclusive regional economic growth.