Geographical Vibrancy and Firm Performance
50 Pages Posted: 20 Mar 2015 Last revised: 19 Oct 2017
Date Written: October 2017
We develop a geographical-based vibrancy index using important location characteristics that measure local economic health. We show that local vibrancy is associated with future firm outcomes, including investment, leverage, profitability, and firm value. More vibrant firms are located in counties with more highly educated populations, lower unemployment, higher labor force participation rate, higher home values, higher density of firms that pay higher wages, and a higher percent above poverty than are low vibrancy firms. Our results indicate that the local vibrancy of a firm headquarters is an important determinant of firm policies and profitability.
Keywords: geography, firm location, vibrancy, firm characteristics, firm performance
JEL Classification: G10, G11, G23
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