GAINS FROM CORPORATE-HEADQUARTERS RELOCATIONS - EVIDENCE FROM THE STOCK-MARKET

This paper provides empirical evidence on investors' perceptions of th e relative advantages and costs of spatial agglomeration. Specifically , we examine the stock price effects of headquarters relocations. The stock market reaction is significantly positive when relocation decisi ons are attributed to cost savings, indicating that cost savings avail able at less centralized locations outweigh any loss of enhancements a ssociated with spatial clustering at urban centers. In contrast, decis ions prompted by managerial self-interest and desire for luxurious off ices elicit an adverse reaction from investors. (C) 1995 Academic Pres s, Inc.