← Search

Journal of Finance Vol. 65 No. 2 2010

Financial Structure, Acquisition Opportunities, and Firm Locations

Andres Almazan; Adolfo de Motta; Sheridan Titman1,2; VAHAP UYSAL3

1 National Bureau of Economic Research · 2 The University of Texas at Austin · 3 DePaul University

open access

Abstract

This paper investigates the relation between firms' locations and their corporate finance decisions. We develop a model where being located within an industry cluster increases opportunities to make acquisitions, and to facilitate those acquisitions, firms within clusters maintain more financial slack. Consistent with our model we find that firms located within industry clusters make more acquisitions, and have lower debt ratios and larger cash balances than their industry peers located outside clusters. We also document that firms in high‐tech cities and growing cities maintain more financial slack. Overall, the evidence suggests that growth opportunities influence firms' financial decisions.

DOI
10.1111/j.1540-6261.2009.01543.x
Volume
65
Issue
2
Pages
529-563
Language
en
Sources
bibtex:phds-export.bib openalex crossref

Cite