We appreciate the helpful comments and suggestions of Bill Christie (Editor), Audrey Hackett, an anonymous referee, the seminar participants at the University of Wisconsin-Milwaukee, National University of Singapore, and the 2007 Financial Management Association Meeting.
Does Corporate Headquarters Location Matter for Firm Capital Structure?
Article first published online: 21 MAR 2011
© 2011 Financial Management Association International
Volume 40, Issue 1, pages 113–138, Spring 2011
How to Cite
Gao, W., Ng, L. and Wang, Q. (2011), Does Corporate Headquarters Location Matter for Firm Capital Structure?. Financial Management, 40: 113–138. doi: 10.1111/j.1755-053X.2010.01136.x
- Issue published online: 21 MAR 2011
- Article first published online: 21 MAR 2011
This paper studies the impact of corporate headquarters location on capital structure policies. We show that firms exhibit conformity in their financing policies to those of geographically proximate firms and that the location of corporate headquarters helps explain the cross-sectional variation of capital structure in the United States. The location effect is robust to local credit market conditions and to state laws on corporate takeover and payout restrictions. The results suggest that noneconomic factors, such as local culture and social interactions among corporate executives, play a significant role in influencing corporate financial policies of firms headquartered in the same metropolitan area.