Trade-offs in Staying Close: Corporate Decision Making and Geographic Dispersion

Augustin Landier, Vinay Nair and Julie Wulf

The Review of Financial Studies, 2009, vol. 22, issue 3, 1119-1148

Abstract: We investigate whether the geographic dispersion of a firm affects corporate decision making. Our findings suggest that social factors work alongside informational considerations to make geography important to corporate decisions. We show that (i) geographically dispersed firms are less employee friendly; (ii) dismissals of divisional employees are less common in divisions located closer to corporate headquarters; and (iii) firms appear to adopt a “pecking order” and divest out-of-state entities before those in-state. To explain these findings, we consider both information and social factors. We find that firms are more likely to protect proximate employees in soft information industries (i.e., when information is difficult to transfer over long distances). However, employee protection holds only when the headquarters is located in a less populated county, suggesting a role for social factors. Additionally, stock markets respond favorably to divestitures of in-state divisions.

Date: 2009
References: Add references at CitEc
Citations: View citations in EconPapers (106)

Downloads: (external link)
http://hdl.handle.net/10.1093/rfs/hhm042 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Journal Article: Trade-offs in Staying Close: Corporate Decision Making and Geographic Dispersion (2009)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:rfinst:v:22:y:2009:i:3:p:1119-1148.

Ordering information: This journal article can be ordered from
https://academic.oup.com/journals

Access Statistics for this article

The Review of Financial Studies is currently edited by Itay Goldstein

More articles in The Review of Financial Studies from Society for Financial Studies Oxford University Press, Journals Department, 2001 Evans Road, Cary, NC 27513 USA.. Contact information at EDIRC.
Bibliographic data for series maintained by Oxford University Press ().