Firm location and the value-growth premium

The mediating role of agglomeration economies in high-speed rail's heterogeneous impact on firm location decisions

ABSTRACT Amid the rise of the digital economy, online attention has emerged as a novel factor shaping urban development. Grounded in media function theory—particularly its surveillance function—this study conceptualizes online attention (OA) as an informational signal that influences urban economic behavior. A panel dataset covering 286 Chinese cities from 2011 to 2023 is employed, together with System GMM, quantile regression, mediation, and threshold models, to examine the effects of OA on urban economic performance. The empirical results indicate that OA exerts a significant and robust positive impact on GDP, with stronger effects observed in less developed cities. Firm location decision (FLD) serves as a mediating channel, while communication barriers and transportation connectivity act as contextual moderators conditioning the strength of this relationship. The findings provide empirical evidence and policy-oriented insights, extending the application of media function theory to the domain of urban economics.

This study was conducted to determine the knowledge and skills of graduating accountancy students. By addressing these areas for development, the students can better prepare themselves for successful careers in the field of accountancy. Based on the findings, they have demonstrated a moderate level of competence in their knowledge and skills areas. However, there is room for improvement in information technology knowledge which were rated at an average level of competence. In terms of their aspirations, their preferred entries are tax staff, tax staff, budget analyst and junior accounting instructor. They perceived that they would engage in a middle level position after four to six years following graduation as Tax Manager, Auditor, Government Accountant, Auditor and Senior Accounting Faculty, Accounting Department Chair. On the other hand, they believed that they would occupy advanced positions after four to six years following graduation as Senior Partner and Senior Consultant, Financial Advisor, Chief Financial Officer, Assistant Commissioner and Dean or Vice. Therefore, it was recommended that graduating accountancy students should establish a structured mentoring program and participate in workshops, seminars, and industry networking events. On the other hand, faculty members should incorporate more real-life case studies and practical exercises into the curriculum and attend professional training and development regularly. Lastly, school administration should foster a culture of continuous improvement, create a feedback mechanism for students, provide professional development opportunities regularly to faculty, enhance collaboration with local accounting firms and businesses, and establish industry partnerships.

ABSTRACT Globalization has profoundly shaped Latin American economic policies, with Foreign Direct Investment (FDI) playing a central role in technology transfer strategies. This paper examines whether FDI generates innovation spillovers among Chilean firms, using firm-level data from the National Innovation Survey (2017–2023) combined with sectoral FDI flows from the Central Bank of Chile. We apply the Crépon-Duguet-Mairesse (CDM) model to correct for selection bias and distinguish between horizontal (industry-level) and vertical (supplier and client linkages) spillover channels. The analysis also examines heterogeneous effects across economic sectors and by firms’ absorptive capacity. We find no evidence of innovation spillovers in primary and service sectors. However, significant positive spillovers emerge in manufacturing, where higher FDI presence increases the probability of local firms implementing new products or processes. These findings suggest that spillovers are sector-specific and depend on the technological intensity and linkage potential of FDI activities. The results have important implications for designing targeted FDI policies in developing economies.

Purpose This study aims to investigate the pressures influencing the adoption of data analytics (DA) in financial auditing in Tunisia. It further analyzes how audit firms respond to these pressures through different patterns of compliance and resistance. It further analyzes how audit firms respond to these pressures through different patterns of compliance and resistance. Design/methodology/approach In total, 54 semistructured interviews were conducted with external auditors across a mix of international and local firms. Findings The findings reveal a two-speed adoption process shaped by heterogeneous institutional responses. Auditors experience strong mimetic and normative pressures stemming from international firm networks and professional bodies. However, these pressures encounter resistance among local firms primarily serving small and medium-sized enterprises. Several institutional frictions appear to sustain this resistance, including limited financial resources, auditors’ insufficient advanced IT capabilities, clients’ low levels of digital maturity and the absence of explicit guidance from audit regulators. Practical implications This study contributes to audit literature by extending beyond technological acceptance models to provide a detailed, context-specific account of the institutional friction encountered in digital transformation in emerging economies. The findings also offer practical insights for regulators and audit firms seeking to address structural barriers and reduce the growing digital divide within the auditing profession. Originality/value This paper responds to calls by Kend and Nguyen (2022) and Gepp et al. (2018) for further empirical research aimed at improving our understanding of the use of audit DA practices, particularly in emerging market contexts. It contributes to the literature on DA adoption in financial auditing in three main ways. First, it examines how auditors in Tunisia, an emerging economy facing distinctive regulatory, institutional and digital infrastructure challenges, approach the adoption of DA. Second, drawing on institutional theory, this study goes beyond identifying the institutional pressures faced by auditors to analyze their responses, including substantive adoption, symbolic compliance and resistance. Third, by relying on in-depth interviews with practicing auditors, this study provides rich, contextualized insights into DA adoption processes that are often overlooked in predominantly quantitative research.

ABSTRACT The digitalization of urban economies disrupts established firm location principles while others persist, making conventional urban policy wisdom harder to rely on. The digitalizing economy is often assumed to reduce the need for specific locations through flexible communication and interaction between firms with digital technologies. To understand these emerging dynamics, studies have examined the location patterns of industries pioneering digital technology development and use: software and information and communication technology (ICT) industries. However, studies on ICT-intensive industries have focused more on larger regional and national scales and on short study periods, with insufficient attention given to spatial evolution on the intraurban scale. Furthermore, industrial location studies using older data omit recent spatial developments. In this paper, we examine the intraurban spatiotemporal evolution of the digital economy by analysing data on software company locations in Tallinn, Estonia from 1997 to 2023, covering the majority of the software industry development trajectory in the city. We examine the temporal evolution of intraurban clustering and model how internal firm characteristics and external urban factors shape the centrality of software company locations within the physical accessibility network. We apply spatial analysis techniques, such as exploratory spatial analysis and Spatial Autoregressive (SAR) modelling. Our results indicate an intensification of intraurban clustering over time, differences in location logics between younger and more mature firms, and an evolving relationship between software company locations and external environmental factors, most notably industrial diversity. Instead of a major suburban shift, we argue that digital economy expansion has reinforced intraurban centralization and integration into physically accessible urban cores, even within industries pioneering digital technologies such as software, with implications for urban policies aimed at encouraging ICT-intensive activities.

In many developing countries, weak institutional strength, excessive regulatory costs and limited enforcement capacity have led to presence of unauthorized or illegal buildings in cities. Such illegality – resulting from noncompliance to the prevailing regulations, implies lack of safety and hazard risk for the occupants. Governments across the world have tried to come up with mechanisms to address the issue, either by legalizing these buildings or by imposing structural changes. There has been dearth of studies analyzing developer behavior toward compliance with building regulations, and the resulting impact on the real estate industry structure. We bridge this gap in literature, by developing a firm-level micro-economic model, of a local real estate market, to examine developer’s profit-maximizing decisions in the presence of high compliance costs, and low enforcement intensity. We further show how a low probability of detection and low penalty regime results in production inefficiencies, prevalence of smaller and localized firms, and presence of complaint and noncomplaint supply. This work shows the discourse on illegality in building construction in two major ways, one, we highlight the trade-off faced by regulatory authorities between a preventive strong enforcement or a curative secondary regime with high penalties. Also, we present the economic rationale for prevalence of small, localized real estate firms, producing at lower than optimum quantity, in developing countries. Rationalization of regulations to bring the compliance costs down, strong enforcement and high penalty for noncompliance are measures that would support a competitive real estate market.

ABSTRACT This study employs firm‐level data to investigate the causal effects of foreign acquisitions on both real economic outcomes and financial performance metrics of target firms. To address potential selection bias arising from the non‐random acquisition patterns of domestic enterprises by foreign investors—a process characterized by the systematic targeting of high‐performing local firms by international entities—we employ advanced econometric methods designed to account for heterogeneous treatment effects. Furthermore, a comparative analysis between foreign and domestic acquisitions is conducted to isolate the specific effects attributable to foreign ownership, distinct from general acquisition dynamics. Empirical findings from comprehensive data on Indian firms demonstrate that foreign acquisitions yield substantial financial improvements but do not confer significant productivity advantages relative to domestic acquisitions.

ABSTRACT This paper examines how foreign direct investment (FDI) affects domestic innovation in China. Using firm-level patent citation data, we show that FDI enhances domestic firms’ access to knowledge not only from foreign-invested enterprises operating locally but also from the global technological frontier. Exploiting exogenous variation from China’s FDI liberalization and focusing on city—industry exposure, we find that these spillovers are strongly localized. The evidence suggests that local agglomeration enables FDI to function as a gateway that lowers barriers to global knowledge absorption. By documenting this indirect channel, the paper sheds new light on how FDI generates innovation gains in developing economies.

China's national emissions trading scheme (CN ETS) is the world's largest carbon market in terms of covered emissions, yet rigorous empirical evidence on its mitigation effectiveness remains limited. Using a balanced panel of 1,957 thermal power units from 2018 to 2024, this study estimates the causal impacts of compliance pressure under the CN ETS on CO2 emissions. Units with allowance deficits reduced CO2 emission intensity by 0.8% and total emissions by 3.5%. Emission reductions are concentrated among small coal-fired units and are driven by efficiency improvements, higher heat supply ratios, and improved fuel quality. In contrast, the impacts on large coal-fired units are limited. Greater intensity reductions are observed among local state-owned and private firms, captive plants, non-pilot units, and technologically less advanced units. Overall, the intensity-based design provides limited incentives to curb output among low-emission-intensity units, suggesting the intensity-based mechanism functions as a transitional arrangement toward a cap-and-trade system.

The advancement in digital and information technology (DIT) has profound effects on individuals, corporations, and society. The benefits of DIT, such as enhanced efficiency, easily access to information, and increased connectivity, are clear. However, scholars have raised various concerns regarding the plethora of information. For example, how DIT affects investors’ information acquisition behavior is unclear. Competing theories offer conflicting predictions in investor information acquisition. These predictions have different implications regarding whether investors acquire more information about local firms (local attention bias), versus about non-local firms, when information becomes easily accessible. Our empirical results show that as DIT develops, investors pay more attention to local firms, amplifying local attention bias. Economic development and a better developed institutional environment amplify rather than attenuate local attention bias. Mediation analysis further shows that DIT development increases attention co-movement and stock return correlation not only directly but also indirectly through local attention bias as a mediator. Our novel evidence suggests that when information is more easily accessible associated with DIT development, information asymmetry can be amplified when agents can choose what to learn, increasing polarization of information acquisition and selective exposure to information.

This research examines sustainable construction methods in the 3rd District of Cagayan by combining deconstruction processes with reuse and recycling to manage increasing amounts of construction and demolition waste. The swift expansion of urban areas combined with insufficient infrastructure systems has led to heightened waste management challenges requiring local implementation of sustainable solutions. The research team implemented mixed-methods research to examine present construction waste techniques and to discover sustainable materials and methods while considering their environmental, economic and social effects. Construction contractors exhibited advanced understanding of sustainable building practices but generally chose material reuse as their primary strategy. The deconstruction process revealed potential but suffered from a shortage of skilled workers and adequate training programs while recycling operations faced obstacles due to poor infrastructure and insufficient economic incentives. Survey results revealed that respondents placed greatest importance on environmental advantages like diminished greenhouse gas emissions and better resource management while economic and social benefits achieved recognition but failed to be seen as essential. Three major barriers exist in the current system due to inconsistent regulatory enforcement together with insufficient government incentives and lack of community participation. Findings indicate construction industry support for sustainability exists at the local level but broader acceptance needs coordinated policy frameworks alongside infrastructure development and economic instruments together with community engagement. Local government entities and construction firms alongside other stakeholders use this framework and set of strategies to create sustainable building practices that meet local development targets while complying with international environmental standards.

ABSTRACT By extending the New Economic Geography model by incorporating digital infrastructure and firm location choices, this paper focuses on how digital infrastructure shapes cross-regional capital flows. Using a ‘company-city pair-year’ panel of fourth-generation (4 G) mobile communication base stations and off-site subsidiaries of listed companies from 2014 to 2023, we find that a 1% increase in digital infrastructure will lead to a 0.0158% increase in off-site subsidiaries. This finding remains robust to endogeneity corrections, including instrumental variables (IV), double machine learning, difference-in-differences (DID) and lag tests. Mechanism analysis shows that digital infrastructure attracts off-site subsidiaries by reducing information and institutional costs and by expanding market size and innovation resources. Stronger positive effect in communication‑dependent industries, non‑state‑owned firms, the service sector, and firms with higher technological intensity indirectly support the proposed mechanism. Further discussion reveals that the positive effect is concentrated within a limited geographic range and declines with distance. Moreover, this process generates a siphoning effect, with developed regions attract capital from underdeveloped ones, and creates a win–win situation for both capital inflow and outflow parties. Our findings provide valuable insights into eliminating market fragmentation and promoting regional coordination development in the digital economy era.

This research investigates the vital function of information technology (IT) infrastructure and digital economic ecosystems in driving the growth of local entrepreneurship across Indonesia's five Super Priority Tourism Destinations (DPSP). Employing a quantitative explanatory framework, the study analyzes secondary data from Statistics Indonesia (BPS), the Ministry of Tourism and Creative Economy, and Bank Indonesia spanning the 2022–2024 period to evaluate how connectivity influences the development of micro, small, and medium enterprises (MSMEs). The findings demonstrate a robust correlation (r = 0.782, p < 0.05) between IT infrastructure stability and the operational longevity of local firms, while the integration of digital payment ecosystems, notably QRIS, successfully mitigated entry barriers for 70,700 new merchants. However, the study identifies a persistent "Infrastructure-Human Gap," where technological readiness exceeds the digital literacy of local communities. The study concludes that fostering local entrepreneurial acceleration necessitates a strategic convergence of physical network expansion and human capital empowerment. Policy interventions should prioritize grassroots digital business incubation centers to guarantee inclusive and equitable tourism growth.

ABSTRACT This paper assesses how financial development enables corporate environmental governance, based on the unique Chinese situation that China's city commercial banks (CCBs) are financial institutions financed and controlled by local city governments and aimed at providing financing services to firms under local jurisdictions. Using the successive establishment of CCBs in China as a quasi‐natural experiment, our staggered difference‐in‐differences estimation highlights findings as follows. First of all, CCBs encourage local firms to abatement, although their original incentive is reducing firm's financing costs, while their political characteristic determines this relationship. Secondly, we find that the combination of credit policy and local government's environmental goals is more conducive to firms' emission reduction, which can reduce the inhibition of environmental goals on output and enhance the pollution control capacity of regions with large fiscal gaps. In addition, we find CCBs show stronger emission reduction incentives for high‐polluting firms and capital‐intensive industries, and have greater incentive for small firms and non‐state‐owned firms with strong credit constraints to reduce emissions. Overall, this paper reveals the relationship behind the effects of CCBs and firm environmental investment in China, highlighting the cooperative relationship between the financial credit policy and local environmental governance.

Cross-sectoral knowledge spillover in the apparel value chain enables incumbent firms in the Global South to transform industry challenges into social innovation (SI) opportunities, redefining B2B dynamics through collaborative learning. This study explores knowledge spillover mechanisms in the B2B apparel value chain, particularly between dominant buyers in the Global North and apparel industries in the Global South. Still, it is largely unclear what knowledge spillover is made of and how it happens. It investigates how buyers facilitate SI practices and how local production firms adapt them to their operational environments. The research employs a qualitative approach using a single case study method. Data collection includes document analysis and in-depth interviews with managers, supervisors, and employees. Thematic analysis, supported by NVivo software, is used to interpret the data. The study finds that SI is embedded within new business models introduced by incumbent firms. Several SI practices contribute to sustainability transitions, enhancing corporate image and legitimacy amid global competition. Additionally, buyer-imposed conditions such as job quality, gender equality, and inclusion are transformed into economic empowerment and livelihood improvements for machine operators in local firms. The research provides valuable insights into how businesses in the Global South can effectively localize global SI practices to enhance sustainability and improve working conditions. It highlights the role of international buyers in shaping responsible business practices through knowledge spillover. The study underscores the importance of SI in addressing human rights concerns, improving labour conditions, and promoting economic empowerment within the apparel industry. This study contributes to the ongoing discourse on the business-society relationship by highlighting the transformative potential of SI in the apparel sector. It offers a nuanced perspective on how firms localize global knowledge to drive sustainability transitions, thereby enriching the understanding of knowledge spillover in the global value chains.

ABSTRACT We examine how the inter-jurisdictional tax competition affects firms’ R&D investments by exploiting China’s 2016 merger of the National Tax Bureau (NTB) and the Local Tax Bureaus (LTBs), a reform that markedly curtailed local officials’ discretion in tax enforcement. The consolidation reassigned local firms established before 2002 from LTBs to the NTB jurisdiction, thereby abolishing the preferential enforcement they had previously received for years. Employing a difference-in-differences design and 18,241 A-share firm-year observations from 2014 to 2020, we find that the treated firms cut R&D expenditure by 0.343 standard deviations following the merger on average relative to controls. Extensive robustness analyses – alternative R&D measures, varied fixed-effects and clustering specifications, and alternative sample definitions – leave the results unchanged, whereas event-study estimates validate parallel pre-trends and reveal a widening post-reform gap over the period. The contraction in R&D spending is stronger for non-state-owned firms, high market-to-book firms, and firms located in provinces with higher marketization levels and better business environments relative to peers elsewhere. Mechanism analyses indicate that elevated effective tax rates and rising management fees transmit the effect. Collectively, these results support a resource-based perspective, suggesting that centralizing tax authority can inadvertently hinder long-horizon technological progress.

The US-China trade war created new opportunities for developing countries to attract foreign investment in solar manufacturing, historically concentrated in the United States, Germany, and China. To avoid United States and European Union tariffs on solar panel imports, China shifted solar panel manufacturing abroad to Southeast Asia. Renewable energy manufacturing investment provides an opportunity for developing countries to both decarbonize and enter global value chains. But does solar manufacturing relocation create local linkages for countries that receive FDI? This paper evaluates how and why renewable energy manufacturing struggles to create local linkages. Drawing upon bilateral solar panel trade data, interviews with local Malaysian firms, and spatial patterns in local solar installation, I find that Chinese production relocation had no effect on either backward linkages with local suppliers or local solar installation. Rather, Chinese panels assembled in Malaysia utilize imported components and are destined for export to Western countries. Instead, Malaysian solar project owners import panels from mainland China. The only local linkage lies in the direct employment of locals among the manufacturing facilities themselves. This calls into question existing green industrial policy scholarship that emphasizes the localization of production for downstream market growth.

An increasing number of studies focus on the impact of firm location on firm productivity. Here, location refers to localised resources or externalities available to firms. These studies have become possible due to advancements in firm-level data availability and productivity estimation methods. There is a growing need to better identify the effects of localised externalities -- "the firm-region nexus" -- on firms, which are the primary targets of many regional development policies. However, relying solely on administrative regions risks committing the ecological fallacy: attributing to all firms in a region the effects observed for a region as a whole. This article presents the state of the art as of 2025, highlighting key issues in this area of research. A total of 165 articles were selected, mainly published in the past decade. From a methodological perspective, there is no real consensus on the models utilised, whether to estimate productivity or to investigate the relationships between the "firm-region nexus" and firm productivity. Spatial integration is still not adequately taken into account: (a) Total Factor Productivity estimations do not account for spatial dependence among methodological concerns; (b) 70\% of the articles do not discuss methodological issues linked to the use of firm locations. A deeper grasp of firm location, particularly the "head office bias", emerges as critical to improving the robustness of analyses. Quantifying the "firm-region nexus" remains heterogeneous across national and local contexts (diverging points of interest, data availability, etc.). Comparing the effects of various types of externalities across countries therefore appears ambitious. Some articles focus on the effect of one category of localised externalities, aiming not only to identify a relationship but also its type: spatial or temporal effect, linear or non-linear relationships, and threshold effects.