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Does Corporate Headquarters Location Matter for Stock Returns?

We document strong comovement in the stock returns of firms headquartered in the same geographic area. Moreover, stocks of companies that change their headquarters location experience a decrease in their comovement with stocks from the old location and an increase in their comovement with stocks fro...

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Published in:	The Journal of finance (New York) 2006-08, Vol.61 (4), p.1991-2015
Main Authors:	PIRINSKY, CHRISTO, WANG, QINGHAI
Format:	Article
Language:	English
Subjects:	Business structures Business studies Common stock Corporate headquarters Correlation Economic geography Economic indices Economic performance Empirical tests Enterprises Geodetic position Headquarters Impact analysis Industrial market Investors Location of enterprises Oil industry Principal place of business Rates of return Regression analysis Securities markets Stock market indices Stock prices Stock returns Studies
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container_end_page	2015
container_issue	4
container_start_page	1991
container_title	The Journal of finance (New York)
container_volume	61
creator	PIRINSKY, CHRISTO WANG, QINGHAI
description	We document strong comovement in the stock returns of firms headquartered in the same geographic area. Moreover, stocks of companies that change their headquarters location experience a decrease in their comovement with stocks from the old location and an increase in their comovement with stocks from the new location. The local co-movement of stock returns is not explained by economic fundamentals and is stronger for smaller firms with more individual investors and in regions with less financially sophisticated residents. We argue that price formation in equity markets has a significant geographic component linked to the trading patterns of local residents.
doi_str_mv	10.1111/j.1540-6261.2006.00895.x
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source	International Bibliography of the Social Sciences (IBSS); JSTOR Archival Journals and Primary Sources Collection; Wiley-Blackwell Read & Publish Collection
subjects	Business structures Business studies Common stock Corporate headquarters Correlation Economic geography Economic indices Economic performance Empirical tests Enterprises Geodetic position Headquarters Impact analysis Industrial market Investors Location of enterprises Oil industry Principal place of business Rates of return Regression analysis Securities markets Stock market indices Stock prices Stock returns Studies
title	Does Corporate Headquarters Location Matter for Stock Returns?
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