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Firm location and the value-growth premium

Author

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  • Ambrose, Brent W.
  • Chen, Yifan
  • Simin, Timothy T.

Abstract

We investigate the value-growth premium puzzle by merging insights from urban economics and finance that relate firm location to its stock performance. The value-growth premium in locations with high historical house price appreciation is 3.6% per year larger than the premium in areas that experienced little house price appreciation. The results support investment-based models explaining the value premium; moreover, we find the house price channel reduces returns of growth firms rather than increasing returns of value firms. House price appreciation remains significant after controlling for common explanations of the premium.

Suggested Citation

  • Ambrose, Brent W. & Chen, Yifan & Simin, Timothy T., 2026. "Firm location and the value-growth premium," Journal of Empirical Finance, Elsevier, vol. 87(C).
    • Handle: RePEc:eee:empfin:v:87:y:2026:i:c:s0927539826000058
    DOI: 10.1016/j.jempfin.2026.101690
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    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General

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