Headquarter Relocation: Financial Performance and Stock Market Reaction
Main Article Content
Abstract
The paper investigatesreaction of the stock market (NASDAQ and NYSE) to 97 announcements of corporate headquarters relocations in the January 1990-August 2008 period. The results indicate thatthe stock market has no initial reaction to those relocating decisions as a whole, which contradicts with earlier findings. Furthermore, the reaction does not differ for the manufacturing, services, and wholesale/retail sectors of the economy. However, the empirical evidences show that the past financial performance of a corporationinfluenced its decision to relocate headquarter
Article Details
Keywords
headquarter relocation, financial performance
References
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16. Knoben, J. and Oerlemans, L.A.G. (2005).The effects of firm relocation on firm performance:A literature review.European Regional Science Association, ERSA Conferences Paper, ersa05p324
17. Manning, C., Rodriguez, M., andGhosh, C. (1999).Devising a corporate facility location strategy to maximize shareholder wealth.Journal of Real Estate Research, 17(3), 321-340.
18. McConnell, J. and Muscarella, C. Corporate Capital Expenditure Decisions and the Market Value of the Firm.Journal ofFinancial Economics 14: 399-422, September 1985.
19. McConnell, J. and Nantell, T. Corporate combinations and common stock returns: The case of joint ventures.Journal of Finance,June 1985, pp. 519-536
20. Semple, K. R. (1973). Recent trends in the spatial concentration of corporate headquarters. Economic Geography, 49, 309-318.
21. Semple, K. R., Green, M. B., & Martz, D. J. F. (1985).Perspectives on corporate headquarters relocation in the United States.Urban Geography, 6(4), 370-391.
22. Shilton, L. and Stanley, C. (1999). Spatial patterns of headquarters, Journal of Real Estate Research, Vol. 17, 341-364
23. Woolridge, J.R. and Snow, C.C. (1990).Stock market reaction to strategic investment decisions. Strategic Management Journal, Vol. 11 No. 5, pp. 353-63.
2. Blackwell, D., Marr, W., and Spivey M. Plant-Closing Decisions and the Market Value of the Firm.Journal of Financial Economics 26: 277-88, August 1990.
3. Brickley, J. A., and Van Drunen, L. D. “Internal Corporate Restructuring: An Empirical Analysis.” Journal of Accounting and Economics, 12 (Jan. 1990), 251-280.
4. Brouwer, A.E., Mariotti, I., and Van Ommeren, J.N. (2002).The firm relocation decision: a logit model. European Regional Science Association, ERSA Conferences Paper, ersa02p205.
5. Brown, S.J. and Warner, J. (1980).Measuring security price performance. Journal of FinancialEconomics, Vol. 8, pp. 205-58.
6. Brown, S.J. and Warner, J. (1985).Using daily stock returns: the case of event studies.
Journal ofFinancial Economics, Vol. 14, pp. 3-31.
7. Bosch, J. and Hirschey, M. The Valuation Effects of Corporate Name Changes.Financial Management 18: 65-73, Winter 1989.
8. Chan, S. H., Gau, G. W., and Wang, K. (1995). Stock market reaction to capital investment decisions: Evidence from business relocations. Journal of Financial and Quantitative Analysis 30(1): 81-101
9. Cox, R. and Schultz, J. (2007).Theinitial US stock market effect on firms that announce corporate headquarters relocation. International Journal of Commerce and Management, Vol. 17 No. 3 2007, pp. 255-263
10. Diacon, T. and Kilier, T. (2003).Where the headquarters are – Evidence from large public companies 1990-2000.Working Paper, Federal Reserve Bank of Chicago.
11. Ghosh, C., Rodriguez, M. and Sirmans, C.F. (1995). Gains from corporate headquarters relocations: evidence from the stock market. Journal of Urban Economics, Vol. 38, pp. 291-311.
12. Gregory, R., Lombard, J. and Seifert, B. (2005).Impact of Headquarters Relocation on the Operating Performance of the Firm.Economic Development Quarterly 2005; 19; 260
13. Holloway, S. R., and Wheeler, J. O. (1991). Corporate headquarters relocation and changes in metropolitan corporate dominance. Economic Geography, 67(1), 54-72.
14. Jarrell, G., Lehn, K., and Marr, W. ‘Institutional ownership, tender offers and long-term investments’, The Office of the Chief Economist, Securities and Exchange Commission, 19 April1985.
15. Kadapakkam, P., and Misra, L. What’s in a nickname? Price and volume effects of a pure ticker symbol change. The Journal of Financial Research No. 1 Pages 53–71 Spring 2007
16. Knoben, J. and Oerlemans, L.A.G. (2005).The effects of firm relocation on firm performance:A literature review.European Regional Science Association, ERSA Conferences Paper, ersa05p324
17. Manning, C., Rodriguez, M., andGhosh, C. (1999).Devising a corporate facility location strategy to maximize shareholder wealth.Journal of Real Estate Research, 17(3), 321-340.
18. McConnell, J. and Muscarella, C. Corporate Capital Expenditure Decisions and the Market Value of the Firm.Journal ofFinancial Economics 14: 399-422, September 1985.
19. McConnell, J. and Nantell, T. Corporate combinations and common stock returns: The case of joint ventures.Journal of Finance,June 1985, pp. 519-536
20. Semple, K. R. (1973). Recent trends in the spatial concentration of corporate headquarters. Economic Geography, 49, 309-318.
21. Semple, K. R., Green, M. B., & Martz, D. J. F. (1985).Perspectives on corporate headquarters relocation in the United States.Urban Geography, 6(4), 370-391.
22. Shilton, L. and Stanley, C. (1999). Spatial patterns of headquarters, Journal of Real Estate Research, Vol. 17, 341-364
23. Woolridge, J.R. and Snow, C.C. (1990).Stock market reaction to strategic investment decisions. Strategic Management Journal, Vol. 11 No. 5, pp. 353-63.