Corporate Financial Performance Following the Opening of China's High‐Speed Rail: A Firm‐Level Perspective on Supply Chain Performance

ABSTRACT In the context of China's successful high‐speed railway (HSR) construction, this study examines the micro‐mechanisms of financial performance related to the opening of HSR from a firm‐level supply chain perspective. This study's findings are as follows: (1) Supply chain performance significantly increased by 14.71% on average after the HSR opening. (2) After the HSR opened, real earnings management (REM) significantly reduced, especially overproduction and abnormal cash flow manipulation. (3) HSR reduced REM by promoting supply chain performance. (4) With a reduction in REM, HSR improved stock pricing efficiency, which is reflected in the reduction of stock price synchronisation and crash risk. The conclusions continue to hold after controlling for other traditional urban transportation, major urban events and strategic corporate M&A arbitrage events.