Geography of Firms and Propagation of Local Economic Conditions

67 Pages Posted: 22 May 2012 Last revised: 17 Jun 2020

See all articles by Gennaro (帅纳) Bernile

Gennaro (帅纳) Bernile

University of Miami - Department of Finance

Stefanos Delikouras

University of Miami - Department of Finance

George M. Korniotis

University of Miami; Miami Business School; University of Miami - Behavioral Decision Making Cluster

Alok Kumar

University of Miami - Miami Herbert Business School

Date Written: June 16, 2020

Abstract

Based on the 10-K listings of public firms, we identify economic connections among U.S. states, which lead to excess comovement in returns and liquidity of firms headquartered in connected states. The economic connections create spillover effects whereby the economy of a state affects its connected states thus amplifying the impact of local economic conditions on the U.S. economy. For example, a 1% production increase in California relates to a 6.71% change in annual U.S. GDP growth, relative to average GDP growth. Collectively, the geographic network of public firms facilitates the propagation of local economic conditions across the U.S.

Keywords: Economic networks, 10-K filings, U.S. states, Gross State Product, predictability, return comovement, liquidity, sales

JEL Classification: C23, E32, E37, G10

Suggested Citation

Bernile, Gennaro (帅纳) and Delikouras, Stefanos and Korniotis, George M. and Kumar, Alok, Geography of Firms and Propagation of Local Economic Conditions (June 16, 2020). Available at SSRN: https://ssrn.com/abstract=2064141 or http://dx.doi.org/10.2139/ssrn.2064141

Gennaro (帅纳) Bernile

University of Miami - Department of Finance ( email )

P.O. Box 248094
Coral Gables, FL 33124-6552
United States

Stefanos Delikouras

University of Miami - Department of Finance ( email )

P.O. Box 248094
Coral Gables, FL 33124-6552
United States

George M. Korniotis

University of Miami ( email )

P.O. Box 248094
Coral Gables, FL 33124-6552
United States
305-284-5728 (Phone)

Miami Business School ( email )

University of Miami - Behavioral Decision Making Cluster ( email )

5250 University Drive
Coral Gables, FL 33124
United States

Alok Kumar (Contact Author)

University of Miami - Miami Herbert Business School ( email )

514 Jenkins Building
Department of Finance
Coral Gables, FL 33124-6552
United States
305-284-1882 (Phone)

HOME PAGE: http://moya.bus.miami.edu/~akumar

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