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Does Corporate Headquarters Location Matter for Firm Capital Structure?


  • Wenlian Gao,

    1. Wenlian Gao is an Assistant Professor at the Brennan School of Business at Dominican University in River Forest, IL.
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  • Lilian Ng,

    1. Lilian Ng is the Hans G. Storr Professor of International Finance at the Sheldon B. Lubar School of Business at the University of Wisconsin-Milwaukee, Milwaukee, WI.
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  • Qinghai Wang

    1. Qinghai Wang is an Associate Professor of Finance at the College of Management at Georgia Institute of Technology, Atlanta, GA.
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  • 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.


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.