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Impact of Headquarters Relocation on the Operating Performance of the Firm

Author

Listed:
  • Richard Gregory

    (University of South Carolina Upstate)

  • John R. Lombard

    (Old Dominion University)

  • Bruce Seifert

    (Old Dominion University)

Abstract

Communities often compete fiercely for corporate headquarters relocations. Although headquarters relocations affect both the losing and winning communities, the authors investigate only the impact of corporate headquarters relocation on the subsequent financial performance of the firm. Prior research using event study methodology suggests that headquarters relocation announcements, when controlling for motivation of relocation, significantly affect short-term stock market reactions. Unlike previous research in this area, the authors use an industry-matched-firm comparison and investigate the impact of relocation on select performance indicators over a 6-year period surrounding the relocation. Using a sample of 167 corporate headquarters relocations during the 1990s, they find little evidence of improved operating performance after headquarters relocation. They also test for the influence of distance as a factor and find that the distance relocated has no significant impact.

Suggested Citation

  • Richard Gregory & John R. Lombard & Bruce Seifert, 2005. "Impact of Headquarters Relocation on the Operating Performance of the Firm," Economic Development Quarterly, , vol. 19(3), pages 260-270, August.
    • Handle: RePEc:sae:ecdequ:v:19:y:2005:i:3:p:260-270
    DOI: 10.1177/0891242405276360
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    References listed on IDEAS

    as
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    Cited by:

    1. Deschryvere, Matthias, 2009. "Mobility of Corporate Headquarter Functions: A Literature Review," Discussion Papers 1203, The Research Institute of the Finnish Economy.
    2. Arjen H. L. Slangen & Marc Baaij & Riccardo Valboni, 2017. "Disaggregating the Corporate Headquarters: Investor Reactions to Inversion Announcements by US Firms," Journal of Management Studies, Wiley Blackwell, vol. 54(8), pages 1241-1270, December.

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