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Why and Where do Headquarters Move?

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  • Strauss-Kahn, Vanessa
  • Vives, Xavier

Abstract

This paper analyses decisions regarding the location of headquarters in the US for the period 1996-2001. Using a unique firm-level database of about 30,000 US headquarters, we study the firm- and location-specific characteristics of headquarters that relocated over that period. Headquarters are concentrated, increasingly so in medium-sized service-oriented metropolitan areas, and the rate of relocation is significant (5% a year). Larger (in terms of sales) and younger headquarters tend to relocate more often, as well as larger (in terms of the number of headquarters) and foreign firms, and firms that are the outcome of a merger. Headquarters relocate to metropolitan areas with good airport facilities, low corporate taxes, low average wages, high level of business services and agglomeration of headquarters in the same sector of activity.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 5070.

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Date of creation: May 2005
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Handle: RePEc:cpr:ceprdp:5070
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Keywords: agglomeration externalities; business services; communication costs; congestion; corporate history; mergers; nested logit; taxes;

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Find related papers by JEL classification:
  • F15 - International Economics - - Trade - - - Economic Integration
  • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
  • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
  • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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