Does Corporate Headquarters Location Matter for Stock Returns?
Year: 2006
Type: article
Abstract: ABSTRACT 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 comovement 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.
Source: The Journal of Finance
Authors: CHRISTO PIRINSKY, QINGHAI WANG
Institutions: University of Wisconsin–Milwaukee, Texas A&M University
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W3122594041