Does Corporate Headquarters Location Matter for Stock Returns?

45 Pages Posted: 1 Jun 2005

See all articles by Christo A. Pirinsky

Christo A. Pirinsky

University of Central Florida

Qinghai Wang

University of Central Florida - College of Business Administration

Multiple version iconThere are 2 versions of this paper

Date Written: 2005

Abstract

We document strong comovement in the stock returns of firms headquartered in the same geographic area. Moreover, stocks of companies that change their headquarters location experience a decrease in their comovement with stocks from the old location and an increase in their comovement with stocks from the new location. The local comovement of stock returns is not explained by economic fundamentals and is stronger for smaller firms with more individual investors and in regions with less financially sophisticated residents. We argue that price formation in equity markets has a significant geographic component linked to the trading patterns of local residents.

Keywords: Location, Comovement, Asset Pricing

JEL Classification: G14, G20

Suggested Citation

Pirinsky, Christo Angelov and Wang, Qinghai, Does Corporate Headquarters Location Matter for Stock Returns? (2005). Available at SSRN: https://ssrn.com/abstract=733483 or http://dx.doi.org/10.2139/ssrn.733483

Christo Angelov Pirinsky

University of Central Florida ( email )

College of Business Administration/Finance
PO Box 161400
Orlando, FL FL 32816
United States
407-823-5962 (Phone)

Qinghai Wang (Contact Author)

University of Central Florida - College of Business Administration ( email )

PO Box 161400
Orlando, FL 32816
United States

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