Does Corporate Headquarters Location Matter for Stock Returns?

Pirinsky, Christo A.; Wang, Qinghai

doi:10.2139/ssrn.733483

Cited by 211 publications

(221 citation statements)

References 51 publications

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“…All other companies have their headquarters in Madrid. These very different results do not reflect a geographic component as found recently by Pirinsky and Wang (2006) linking price formation first in the company's home market. Moreover, they may reflect a higher degree of arbitrage in Bilbao, that is, different trading patterns in equity markets in Bilbao.…”

Section: Error Correction Modelcontrasting

confidence: 88%

Capital market integration in Spain? Introducing the Bilbao Stock Exchange, 1891-1936

Houpt

Cagigal

2010

RHE / JILAEH

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This paper presents the first results of our most recent research on the Bilbao Stock Exchange (BSE) from its foundation in 1890 up to the Spanish Civil War. We examine the origin of the Exchange and follow its evolution over the first half-century of existence. To this end we introduce some of the stock exchange indexes we have calculated for Bilbao and put them into comparative perspective with the existing series on general economic and industrial activity and the indexes for other Spanish exchanges for the period considered. These comparisons show Bilbao's evolution from a public debt-dominated market We have received outstanding assistance from Marisol Arnáiz and Víctor Arroyo in the BBVA Archivo Histórico and Maripaz Alonso in the Biblioteca Bolsa de Madrid. We thank Stefano Battilossi, Nacho Peñ a and Mikel Tapia and the participants of the first Eurhistock conference in Madrid whose comments improved earlier versions of this paper. A special thanks to José Manuel González Vesga for his help and comments. The usual disclaimer applies to the errors that may remain.a Departamento de Historia Econó mica e Instituciones; Calle Madrid, 126; 28903 Getafe; Españ a. shoupt@clio.uc3m.es, jcrojo@clio.uc3m.es. Vol. 28, No. 3: 535-573. doi:10.1017/S0212610910000145 & Instituto Figuerola, Universidad Carlos III de Madrid, 2010 535 to an industrial exchange very much tied to regional development. Finally, we contrast the degree of financial market integration associated with the existing Spanish exchange indexes. Our analysis finds strong support for considering the BSE index as an industrial index and little evidence of capital market integration between the principal Spanish exchanges before the 1920s. Revista de Historia Económica, Journal of lberian and Latin American Economic History

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Section: Error Correction Modelcontrasting

confidence: 88%

Capital market integration in Spain? Introducing the Bilbao Stock Exchange, 1891-1936

Houpt

Cagigal

2010

RHE / JILAEH

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“…From the empirical standpoint, our results support the prior findings in the literature and expand the current understanding of the geographic components in price formation (e.g., Pirinsky and Wang, 2006;Arena and Dewally, 2012;García and Norli, 2012). The figures indicate that firm geographic location emerges as a non-negligible asset-pricing factor, which has an effect of the same magnitude on corporate market value as that of the ROE.…”

Section: Introductionsupporting

confidence: 87%

Local IPOs, local delistings, and the firm location premium

Baschieri

Carosi

Mengoli

2015

Journal of Banking & Finance

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a b s t r a c tBorrowing a measure from ecology, we introduce a spatial dispersion index to quantify the firm traits related to firm geographic location and investigate firm exposure to local home bias and local investor risk tolerance as determinants of corporate market value. Consistent with the investor preference for local stocks, we find listed firms benefit from a location premium that increases with firm isolation and local investor wealth. IPOs and delistings are found to affect the market value of neighboring listed firms: isolated firms decrease in value when they cluster due to local IPOs while clustered firms increase in value as they become more isolated due to local delistings. Local firm clustering and risk tolerance also affect IPO underpricing. Empirical findings depict a framework where IPOs and delistings are locally jointly determined.

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“…If traders with privileged information exploit it in their local market, the place where it originates should help determine the location of trading activity. For example, if privileged information mainly "trickles down" from the company's headquarters (see Davis and Henderson (2004); Pirinsky and Wang (2006)), one could expect informed trading to concentrate in the market closest to the headquarters. And in fact, Grinblatt and Keloharju (1999) show that Finnish investors' portfolios overweight the stocks of geographically close companies, and Coval and Moskowitz (1999) detect a similar bias in the portfolio choices of US domestic funds.…”

Section: Information-based Tradingmentioning

confidence: 99%

Where Is the Market? Evidence from Cross-Listings in the United States

Halling¹,

Pagano²,

Randl³

et al. 2007

Rev. Financ. Stud.

113

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We analyze the location of stock trading for firms with a US cross-listing. The fraction of trading that occurs in the United States tends to be larger for companies from countries that are geographically close to the United States and feature low financial development and poor insider trading protection. For companies based in developed countries, trading volume in the United States is larger if the company is small, volatile, and technology-oriented, while this does not apply to emerging country firms. The domestic turnover rate increases in the cross-listing year and remains higher for firms based in developed markets, but not for emerging market firms. Domestic trading volume actually declines for companies from countries with poor enforcement of insider trading regulation. (JEL G15, G30.) Many companies list their shares not only on their domestic exchange, but also on foreign exchanges-a fact for which several reasons have been offered and explored (see Saudagaran (1988); Karolyi (1998Karolyi ( , 2006Baker, Nofsinger, and Weaver (2002);Pagano, Röell, and Zechner (2002);Doidge, Karolyi, and Stulz (2004);and Sarkissian and Schill (2004), among others). One motive often hypothesized for this decision is that cross-listing facilitates trading by foreign investors. If so, then one would expect cross-listings to be followed by fairly substantial and persistent trading activity in the foreign market.

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Does Corporate Headquarters Location Matter for Stock Returns?

Cited by 211 publications

References 51 publications

Capital market integration in Spain? Introducing the Bilbao Stock Exchange, 1891-1936

Capital market integration in Spain? Introducing the Bilbao Stock Exchange, 1891-1936

Local IPOs, local delistings, and the firm location premium

Where Is the Market? Evidence from Cross-Listings in the United States

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