Urban Vibrancy and Corporate Growth

We find that a firm’s investment is highly sensitive to the investments of other firms headquartered nearby, even those in very different industries. It also responds to fluctuations in the cash flows and stock prices (q) of local firms outside its sector. These patterns do not appear to reflect exogenous area shocks such as local shocks to labor or real estate values, but rather suggest that local agglomeration economies are important determinants of firm investment and growth.

[1]  Joshua D. Coval,et al.  The Geography of Investment: Informed Trading and Asset Prices , 1999, Journal of Political Economy.

[2]  Aydoğan Alti.  How Sensitive is Investment to Cash Flow When Financing is Frictionless? , 2001 .

[3]  Gerard Hoberg,et al.  Product Market Synergies and Competition in Mergers and Acquisitions: A Text-Based Analysis , 2008 .

[4]  J. Henderson.  The Sizes and Types of Cities , 1972 .

[5]  Edward L. Glaeser,et al.  The Geographic Concentration of Industry: Does Natural Advantage Explain Agglomeration? , 1999 .

[6]  Glenn Ellison,et al.  What Causes Industry Agglomeration? Evidence from Coagglomeration Patterns , 2007 .

[7]  J. Poterba.  Are Consumers Forward Looking? Evidence from Fiscal Experiments , 1988 .

[8]  Pengjie Gao,et al.  The Price of a CEO's Rolodex , 2012 .

[9]  Timothy Erickson,et al.  Measurement Error and the Relationship between Investment and q , 2000, Journal of Political Economy.

[10]  A. Chandler,et al.  Regional Advantage: Culture and Competition in Silicon Valley and Route 128 , 1994 .

[11]  C. Pirinsky,et al.  Does Corporate Headquarters Location Matter for Stock Returns? , 2006 .

[12]  Emily Washington.  Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier, and Happier – By Edward L. Glaeser , 2011 .

[13]  E. Glaeser,et al.  Growth in Cities , 1991, Journal of Political Economy.

[14]  H. Holzer,et al.  Demand Shifts, Population Adjustments, and Labor Market Outcomes during the 1980s , 1996, Journal of Labor Economics.

[15]  E. Glaeser,et al.  Crime and Social Interactions , 1995 .

[16]  Edward L. Glaeser,et al.  Geographic Concentration in U.S. Manufacturing Industries: A Dartboard Approach , 1994, Journal of Political Economy.

[17]  James E. Rauch,et al.  Productivity Gains from Geographic Concentration of Human Capital: Evidence from the Cities , 1991 .

[18]  J. Henderson,et al.  Marshall's scale economies , 2001 .

[19]  Enrico Moretti,et al.  Local Labor Markets , 2010, SSRN Electronic Journal.

[20]  M. Weisbach,et al.  The Cash Flow Sensitivity of Cash , 2003 .

[21]  State-Level Business Cycles and Local Return Predictability , 2013 .

[22]  F. E..  Principles of Economics , 1890, Nature.

[23]  C. Manski.  Identification of Endogenous Social Effects: The Reflection Problem , 1993 .

[24]  S. Rosenthal,et al.  The Determinants of Agglomeration , 2001 .

[25]  E. Glaeser,et al.  Urban Resurgence and the Consumer City , 2006 .

[26]  Edward L. Glaeser,et al.  The Review of Economics and Statistics , 2002 .

[27]  J. Gan.  Collateral , Debt Capacity , and Corporate Investment : Evidence from a Natural Experiment , 2006 .

[28]  Steven M. Fazzari,et al.  Financing Constraints and Corporate Investment , 1987 .

[29]  R. Lucas.  On the Mechanics of Economic Development , 1988 .

[30]  Gerard Hoberg,et al.  Text-Based Network Industries and Endogenous Product Differentiation , 2010, Journal of Political Economy.

[31]  Curtis J. Simon,et al.  Human capital and the rise of American cities, 1900–1990 , 2002 .

[32]  R. Hall,et al.  Productivity and the Density of Economic Activity , 1993 .

[33]  Jesse M. Shapiro.  Smart Cities: Quality of Life, Productivity, and the Growth Effects of Human Capital , 2005, The Review of Economics and Statistics.

[34]  Toni M. Whited,et al.  Macroeconomic Implications of Agglomeration , 2009 .

[35]  Selale Tuzel,et al.  Corporate Real Estate Holdings and the Cross-Section of Stock Returns , 2010 .

[36]  Kevin Morgan,et al.  Regional advantage: Culture and competition in Silicon Valley and route 128: AnnaLee Saxenian, (Harvard University Press, Cambridge, MA, 1994) 226 pp; Price [UK pound]19.95, ISBN 0 674 75339 9 , 1996 .

[37]  Joshua D. Rauh.  Investment and Financing Constraints: Evidence from the Funding of Corporate Pension Plans , 2006 .

[38]  Eric S. Rosengren,et al.  Collateral Damage: Effects of the Japanese Bank Crisis on Real Activity in the United States , 2000 .

[39]  E. Glaeser,et al.  The Complementarity between Cities and Skills , 2009 .

[40]  D. Thesmar,et al.  The Collateral Channel: How Real Estate Shocks Affect Corporate Investment , 2009 .

[41]  S. Kaplan,et al.  Do Investment-Cash Flow Sensitivities Provide Useful Measures of Financing Constraints? , 1997 .

[42]  Joao F. Gomes,et al.  Financing Investment , 2001 .

[43]  Tobias J. Moskowitz,et al.  Home Bias at Home: Local Equity Preference in Domestic Portfolios , 1999 .

[44]  David C. Maré,et al.  Cities and Skills , 1994, Journal of Labor Economics.

[45]  Christopher R. Berry,et al.  The Divergence of Human Capital Levels Across Cities , 2005 .

[46]  W. Wheaton,et al.  Urban Wages and Labor Market Agglomeration , 2000 .

[47]  S. Titman,et al.  Firm Location and the Creation and Utilization of Human Capital , 2003 .