The Stock Market Tips
41 Pages Posted: 25 Feb 2020 Last revised: 12 Mar 2020
Date Written: February 13, 2020
We provide evidence that public firms can affect their local economies through the discretionary spending of their employees on local goods and services. Using New York City taxi records, we find that tips paid for taxis taken near firms’ headquarters are higher on the days their stock returns—as well as the market’s returns—are higher. This finding is stronger for firms offering greater stock-based compensation, and tipping also increases following the initial public offerings of firms. The number of taxis taken near firms’ headquarters, too, increases with their stock returns. Placebo tests suggest that these findings are not spurious.
Keywords: Firm Location; Local Economic Activity; Discretionary Spending; Stock Market Wealth Effects
JEL Classification: G30, G19, G51, G40, D10, D31, M52
Suggested Citation: Suggested Citation