Interregional infrastructure,competition for capital,and local public expenditure policies: Evidence from China's high-speed rail network

Interregional infrastructure promotes market integration and enhances the mobility of capital, thereby intensifying fiscal competition among local governments. Exploiting the expansion of China's high-speed rail (HSR) network as plausibly exogenous shocks, this study examines how Interregional infrastructure affects the fiscal competition among local governments. We find that after connecting with the HSR network, city governments tend to dedicate a lower proportion of public spending to consumption goods, which benefit immobile households, and invest more in productive inputs, which attract mobile firms. We also find that the negative effect of HSR connection on the proportion of consumption goods is more pronounced in peripheral cities than core cities because periphery cities face a larger increase in capital mobility due to the core–periphery effects of trade integration induced by HSR. Our findings indicate that the behavioural responses of local governments should be accounted for when assessing the social welfare of interregional infrastructure.     

Connected Lending in Bank Lines of Credit

Journal of Financial Services Research - We find that firms usually obtain larger credit lines if their executives have common past employers or past board memberships with lenders. The effect not...     

Institutional investor distraction and innovation

Prior studies suggest high institutional ownership provides stable funding for firm managers supporting long-term innovation. However, we hypothesize that the level of holdings can also proxy for institutional attention. We address this question and find that institutional distraction negatively impacts board monitoring and advisory support for management, reducing R&D, patent filings, citations and creativity. Distraction is concentrated in (1) firms owned by institutions providing low attention before the shock and (2) industries facing low substitute monitoring through competition. Distraction also affects information flow in firms facing high labour mobility and high peer firm innovation (technology spillovers).