Geographic Spillover of Dominant Firms' Shocks

60 Pages Posted: 26 Jan 2017 Last revised: 22 Jul 2019

See all articles by Sima Jannati

Sima Jannati

University of Missouri-Columbia

Date Written: July 22, 2019


This paper shows that productivity shocks to the 100 largest U.S. firms (by revenue) contain systematic information. Specifically, shocks to the top-100 firms predict future shocks to geographically close firms. Intra-sector trade links are an important economic channel for spillover effects. However, these spillovers are not restricted to firms' trade links only. Knowledge externalities and state income tax payments of the top-100 firms are other economic channels through which shocks propagate. Overall, the results show how productivity shocks to the few largest firms in the U.S. spillover to other firms and potentially aggregate to affect the national economy.

Keywords: top 100 firms; idiosyncratic shocks; systematic information; geographic spillover

JEL Classification: G02; G14; G24

Suggested Citation

Jannati, Sima, Geographic Spillover of Dominant Firms' Shocks (July 22, 2019). 8th Miami Behavioral Finance Conference 2017; 2019 Academic Research Colloquium for Financial Planning and Related Disciplines. Available at SSRN: or

Sima Jannati (Contact Author)

University of Missouri-Columbia ( email )

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