Trade-offs in Staying Close: Corporate Decision Making and Geographic Dispersion

• 成果类型: Article
• 署名作者: Landier, Augustin; Nair, Vinay B.; Wulf, Julie
• 署名单位: Harvard University; New York University; University of Pennsylvania
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhm042
• 发表日期: 2009
• 页码: 1119
• 关键词: DIVESTITURE ANNOUNCEMENTS; distance

摘要

We investigate whether the geographic dispersion of a firm affects corporate decision making. Our findings suggest that social factors work alongside informational considerations to make geography important to corporate decisions. We show that (i) geographically dispersed firms are less employee friendly; (ii) dismissals of divisional employees are less common in divisions located closer to corporate headquarters; and (iii) firms appear to adopt a pecking order and divest out-of-state entities before those in-state. To explain these findings, we consider both information and social factors. We find that firms are more likely to protect proximate employees in soft information industries (i.e., when information is difficult to transfer over long distances). However, employee protection holds only when the headquarters is located in a less populated county, suggesting a role for social factors. Additionally, stock markets respond favorably to divestitures of in-state divisions.