Gains from Corporate Headquarters Relocations: Evidence from the Stock Market

THE J. OF URBAN ECONOMICS

Posted: 20 May 1998

See all articles by Chinmoy Ghosh

Chinmoy Ghosh

University of Connecticut - Department of Finance

Mauricio Rodriguez

Texas Christian University

C. F. Sirmans

Florida State University - Department of Risk Management, Insurance, Real Estate & Business Law

Abstract

This paper provides empirical evidence on investors' perceptions of the relative advantages and costs of spatial agglomeration. Specifically, we examine the stock price effects of headquarters relocations. The stock market reaction is significantly positive when relocation decisions are attributed to cost savings, indicating that cost savings available at less centralized locations outweigh any loss of enhancements associated with spatial clustering at urban centers. In contrast, decisions prompted by managerial self-interest and desire for luxurious offices elicit an adverse reaction from investors.

JEL Classification: R0

Suggested Citation

Ghosh, Chinmoy and Rodriguez, Mauricio and Sirmans, C. F., Gains from Corporate Headquarters Relocations: Evidence from the Stock Market. THE J. OF URBAN ECONOMICS, Available at SSRN: https://ssrn.com/abstract=9101

Chinmoy Ghosh (Contact Author)

University of Connecticut - Department of Finance ( email )

School of Business
2100 Hillside Road
Storrs, CT 06269
United States
860-486-3040 (Phone)
860-486-0349 (Fax)

Mauricio Rodriguez

Texas Christian University ( email )

P.O. Box 298530
Fort Worth, TX 76129
United States
817-921-7514 (Phone)
817-921-7227 (Fax)

C. F. Sirmans

Florida State University - Department of Risk Management, Insurance, Real Estate & Business Law ( email )

Tallahasse, FL 32306
United States
850 644-4076 (Phone)

HOME PAGE: http://www.cob.fsu.edu/rmi

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