The Geography of Value Creation

Casey Dougal, Christopher A Parsons and Sheridan Titman

The Review of Financial Studies, 2022, vol. 35, issue 9, 4201-4248

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.

JEL-codes: G10 R10 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (5)

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