Geography of Firms and Propagation of Local Economic Conditions

66 Pages Posted: 22 May 2012 Last revised: 26 Jul 2021

See all articles by Gennaro (帅纳) Bernile

Gennaro (帅纳) Bernile

University of Miami - Department of Finance

Stefanos Delikouras

University of Miami - Department of Finance

George M. Korniotis

University of Miami - Department of Finance

Alok Kumar

University of Miami - Miami Herbert Business School

Date Written: June 16, 2020

Abstract

This study shows that the geographic network of public firms facilitates the propagation of local economic conditions across the U.S. We identify economic connections among U.S. states based on the 10-K listings of public firms and show that the returns and liquidity of firms headquartered in connected states exhibit excess comovement. The economic connections also generate spillover effects where the economy of a state affects its connected states and amplifies the impact of local economic conditions on the U.S. economy. In particular, a 1% production increase in a large state like California is associated with a 6.71% change in annual U.S. GDP growth, relative to average GDP growth.

Keywords: Economic networks, 10-K filings, Gross State Product, predictability, return comovement, liquidity, sales

JEL Classification: C23, E32, E37, G10

Suggested Citation

Bernile, Gennaro (帅纳) and Delikouras, Stefanos and Korniotis, George M. and Kumar, Alok, Geography of Firms and Propagation of Local Economic Conditions (June 16, 2020). Available at SSRN: https://ssrn.com/abstract=2064141 or http://dx.doi.org/10.2139/ssrn.2064141

Gennaro (帅纳) Bernile

University of Miami - Department of Finance ( email )

P.O. Box 248094
Coral Gables, FL 33124-6552
United States

Stefanos Delikouras

University of Miami - Department of Finance ( email )

P.O. Box 248094
Coral Gables, FL 33124-6552
United States

George M. Korniotis

University of Miami - Department of Finance ( email )

P.O. Box 248094
Coral Gables, FL 33124-6552
United States
305-284-5728 (Phone)

Alok Kumar (Contact Author)

University of Miami - Miami Herbert Business School ( email )

517B Jenkins Building
Department of Finance
Coral Gables, FL 33124-6552
United States
305-284-1882 (Phone)

HOME PAGE: http://sites.google.com/view/alokmiami/home

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