Urban Vibrancy and Corporate Growth
66 Pages Posted: 18 Mar 2012 Last revised: 2 Oct 2014
Date Written: May 8, 2014
We find that a firm's investment is highly sensitive to the investments of other firms headquartered nearby, even those in very different industries. It also responds to fluctuations in the cash flows and stock prices (q) of local firms outside its sector. These patterns do not appear to reflect exogenous area shocks such as local shocks to labor or real estate values, but rather suggest that local agglomeration economies are important determinants of firm investment and growth.
Keywords: agglomeration economies, spillovers, investment, equity issuance, human capital
JEL Classification: G30, R30
Suggested Citation: Suggested Citation