Urban Vibrancy and Firm Value Creation

58 Pages Posted: 25 Jul 2018 Last revised: 15 Mar 2019

See all articles by Casey Dougal

Casey Dougal

Drexel University

Christopher A. Parsons

Foster School of Business, University of Washington

Sheridan Titman

University of Texas at Austin - Department of Finance; National Bureau of Economic Research (NBER)

Date Written: July 19, 2018

Abstract

City level differences in industry-adjusted Tobin’s q, an estimate of the value created for shareholders, are large, and have widened sharply over the last twenty years. Proxies for a city’s appeal to high-skill workers, such as existing education rates and favorable weather, are strongly associated with Tobin’s q, both in levels and changes. These results indicate that shareholders have recently captured a bigger part of the benefits associated with superior locations. The higher stock prices of firms in these locations appear to be driven by future growth opportunities, rather than improvements in current operating efficiency.

Keywords: location, firm fundamentals, city fixed effects, urban economics, stock returns, headquarter location, spillovers, agglomeration

JEL Classification: G30, R30, R1

Suggested Citation

Dougal, Casey and Parsons, Christopher A. and Titman, Sheridan, Urban Vibrancy and Firm Value Creation (July 19, 2018). 9th Miami Behavioral Finance Conference 2018. Available at SSRN: https://ssrn.com/abstract=3216689 or http://dx.doi.org/10.2139/ssrn.3216689

Casey Dougal

Drexel University ( email )

101 N. 33rd St.
Philadelphia, PA 19104
United States
215.571.4595 (Phone)

Christopher A. Parsons (Contact Author)

Foster School of Business, University of Washington ( email )

PACCAR HALL
4273 E Stevens Way NE
Seattle, WA 98195
United States

Sheridan Titman

University of Texas at Austin - Department of Finance ( email )

Red McCombs School of Business
Austin, TX 78712
United States
512-232-2787 (Phone)
512-471-5073 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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