Geographical Vibrancy and Firm Performance

50 Pages Posted: 20 Mar 2015 Last revised: 19 Oct 2017

Michael J. Cooper

University of Utah - David Eccles School of Business

Alexei V. Ovtchinnikov

HEC Paris - Finance Department

Date Written: October 2017

Abstract

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

Suggested Citation

Cooper, Michael J. and Ovtchinnikov, Alexei V., Geographical Vibrancy and Firm Performance (October 2017). HEC Paris Research Paper No. FIN-2015-1090. Available at SSRN: https://ssrn.com/abstract=2580563 or http://dx.doi.org/10.2139/ssrn.2580563

Michael J. Cooper (Contact Author)

University of Utah - David Eccles School of Business ( email )

1645 E Campus Center Dr
Salt Lake City, UT 84112-9303
United States

Alexei V. Ovtchinnikov

HEC Paris - Finance Department ( email )

1 rue de la Liberation
Jouy-en-Josas Cedex, 78351
France

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