Does headquarters location matter for corporate cash holding?

Neighborhood Matters: The Impact of Location on Broad Based Stock Option Plans

Busy directors and firm performance: Does firm location matter?

Does headquarters location matter in corporate tax avoidance?

This study examines empirically if corporate headquarters location matters for board leadership structure under different asymmetric information settings. We examine the impact of corporate headquarters location on CEO duality for the period 1998–2013. Using the Metropolitan Statistical Area (MSA) to define the location of corporate headquarters, we find that metropolitan firms are more likely to have CEO-Chairman duality than rural firms. Utilizing idiosyncratic risk and analyst forecast error or dispersion to proxy for information asymmetry, we find that metropolitan firms are more likely to have CEO-chairman duality than rural firms in the low information asymmetry setting. Our findings suggest that corporate headquarters location is an important determinant of board leadership structure.

We show that the ordinary least squares applied to right-hand-side variables consisting of averages of neighbouring observations such as stock returns representing a portfolio of firms in the same location or industry result in biased and inconsistent estimates. A maximum likelihood estimation procedure that will produce consistent estimates for this type of model is set forth. In addition, we show how to correctly interpret the maximum likelihood parameter estimates.