Does Geographic Dispersion Affect Firm Valuation?

摘要

We find that the geographic dispersion of a corporation a_ects its firm valuation. Firms with subsidiaries located in di_erent regions of the United States experience a valuation discount of 6.2% after controlling for the impact of both global and industrial diversifications, and the valuation discount increases as firms expand their operations to di_erent regions nationwide. Results show that firms with weak corporate governance tend to expand geographically, and these firms experience greater value discounts compared with their counterparts with good corporate governance. Overall, our results suggest that the geographic location of corporate activities is an essential component of corporate policies and has mportant market valuation implications.