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The Geography of Value Creation

Author

Listed:
  • Casey Dougal
  • Christopher A Parsons
  • Sheridan Titman

Abstract

Over the last 20 years, the stock market indicates that value creation has become heavily concentrated in a few headquarter cities. At the same time, firms in value-creating cities have experienced declines in their profitability, because of large increases in wages and rents. Our findings thus highlight the difference between flow-based (e.g., operating profits) and stock-based (e.g., securities prices) indicators of local productivity. Conventional proxies for a city’s appeal to high value-added workers, such as education rates and weather, are positively related to stock market valuations, but negatively related to near-term operating performance.

Suggested Citation

  • Casey Dougal & Christopher A Parsons & Sheridan Titman, 2022. "The Geography of Value Creation," The Review of Financial Studies, Society for Financial Studies, vol. 35(9), pages 4201-4248.
    • Handle: RePEc:oup:rfinst:v:35:y:2022:i:9:p:4201-4248.
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    File URL: http://hdl.handle.net/10.1093/rfs/hhab128
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    Citations

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    Cited by:

    1. Hsin, Chin-Wen & Peng, Shu-Cing, 2023. "Investor propensity to speculate and price delay in emerging markets," International Review of Financial Analysis, Elsevier, vol. 86(C).
    2. Giang Nguyen & My Nguyen & Anh Viet Pham & Man Duy Marty Pham, 2023. "Navigating investment decisions with social connectedness : Implications for venture capital," Post-Print hal-04325756, HAL.
    3. Nguyen, Giang & Nguyen, My & Pham, Anh Viet & Pham, Man Duy (Marty), 2023. "Navigating investment decisions with social connectedness: Implications for venture capital," Journal of Banking & Finance, Elsevier, vol. 155(C).
    4. Grieser, William & Maturana, Gonzalo & Spyridopoulos, Ioannis & Truffa, Santiago, 2022. "Agglomeration, knowledge spillovers, and corporate investment," Journal of Corporate Finance, Elsevier, vol. 77(C).

    More about this item

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General

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