@article{925c69f77a7d4c81b42ec49a7eb6872f,
title = "On the fast track: Information acquisition costs and information production",
abstract = "Using the introduction of high-speed rail (HSR) as an exogenous shock to costs of information acquisition, we show reductions in information-acquisition costs lead to (i) a significant increase in information production, evidenced by a higher frequency of analysts visiting portfolio firms and (ii) improvement in output quality, manifested in higher forecast accuracy and better recommendations. The effect is more pronounced for firms with information that is difficult to produce. Importantly, more information production is also associated with improved price efficiency. We corroborate these findings using a large-scale survey of financial analysts. Finally, both the empirical and survey results highlight the importance of soft information in analysts{\textquoteright} unique-information production.",
keywords = "Acquisition cost, Information acquisition, Information production, Information quality, Price efficiency, Sell-side analysts, Soft information",
author = "Deqiu Chen and Yujing Ma and Xiumin Martin and Roni Michaely",
note = "Funding Information: This paper has benefited from comments of seminar participants at The Hebrew University of Jerusalem, Ohio State University, Washington University in St. Louis, Pennsylvania State University, CGEB China Initiative Research Seminar at New York University, the Hong Kong Polytechnic University, McMaster University Accounting Research Symposium 2019, Sun Yat-Sen University Finance International Conference 2019, University of Alberta, University of International Business and Economics Conference 2019, Gennaro Bernile, Rich Frankel, Xavier Giroud, Todd Gormley, Ohad Kadan, Mark Leary, Asaf Manela, Phil Dybvig, and Jean-Charles Roche. Chen acknowledges financial support from National Science Foundation of China (grant no. 71790604). Funding Information: This paper has benefited from comments of seminar participants at The Hebrew University of Jerusalem, Ohio State University, Washington University in St. Louis, Pennsylvania State University, CGEB China Initiative Research Seminar at New York University, the Hong Kong Polytechnic University, McMaster University Accounting Research Symposium 2019, Sun Yat-Sen University Finance International Conference 2019, University of Alberta, University of International Business and Economics Conference 2019, Gennaro Bernile, Rich Frankel, Xavier Giroud, Todd Gormley, Ohad Kadan, Mark Leary, Asaf Manela, Phil Dybvig, and Jean-Charles Roche. Chen acknowledges financial support from National Science Foundation of China (grant no. 71790604). Publisher Copyright: {\textcopyright} 2021 Elsevier B.V.",
year = "2022",
month = feb,
doi = "10.1016/j.jfineco.2021.06.025",
language = "English",
volume = "143",
pages = "794--823",
journal = "Journal of Financial Economics",
issn = "0304-405X",
publisher = "Elsevier B.V.",
number = "2",
}