On the fast track: Information acquisition costs and information production

Deqiu Chen, Yujing Ma, Xiumin Martin, Roni Michaely

Research output: Journal article publicationJournal articleAcademic researchpeer-review

55 Citations (Scopus)


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’ unique-information production.

Original languageEnglish
Pages (from-to)794-823
Number of pages30
JournalJournal of Financial Economics
Issue number2
Publication statusPublished - Feb 2022


  • Acquisition cost
  • Information acquisition
  • Information production
  • Information quality
  • Price efficiency
  • Sell-side analysts
  • Soft information

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics
  • Strategy and Management


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