Geography of Firms and Propagation of Local Economic Shocks

68 Pages Posted: 22 May 2012 Last revised: 7 Mar 2019

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 - School of Business Administration

Date Written: March 6, 2019

Abstract

Using information from 10-K filings of public firms, we identify economic connections among U.S. states. At the firm level, we document excess comovement in returns, liquidity, and sales growth of firms headquartered in economically connected states. At the aggregate level, the economic connections create spillover effects whereby economic shocks in a state’s employment, investment, and gross state product affect its connected states and the U.S. economy. For example, a 1% production shock in California is related to a 6.71% change in annual U.S. GDP growth, relative to the average GDP growth. Collectively, the geographic network of public firms facilitates the propagation of local shocks across the U.S. economy

Keywords: Economic networks, 10-K filings, U.S. states, Gross State Product (GSP), predictability

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 Shocks (March 6, 2019). 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 - School of Business Administration ( 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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