Review of Financial Studies Vol. 35 No. 9 2022
The Geography of Value Creation
Abstract
Over the last 20 years, the stock market indicates that value creation has become heavily concentrated in a few headquarter cities. At the same time, firms in value-creating cities have experienced declines in their profitability, because of large increases in wages and rents. Our findings thus highlight the difference between flow-based (e.g., operating profits) and stock-based (e.g., securities prices) indicators of local productivity. Conventional proxies for a city’s appeal to high value-added workers, such as education rates and weather, are positively related to stock market valuations, but negatively related to near-term operating performance.
- DOI
- 10.1093/rfs/hhab128
- Volume
- 35
- Issue
- 9
- Pages
- 4201-4248
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref