The initial US stock market effect on firms that announce corporate headquarters relocation
Bibliographic record
Abstract
Purpose To examine the initial stockholder wealth impact of firms announcing corporate headquarters relocation. Design/methodology/approach The LexisNexis Academic database were searched from December 1994 to April 2005 for US firms announcing headquarters relocation. The companies were then categorized according to the rationale (cost/consolidation, space, managerial interests, none given) for moving. Standard event study methodology, market‐model version of the capital asset pricing model, was employed to ascertain the impact of this event to stockholders. Findings In general, the stock‐market reaction is favorable for companies moving their head office. Moreover, stockholders react most positively to the managerial interest reason for such a shift. Nevertheless, the cost/consolidation reason and to some extent even when no reason is given shareholders viewed relocation announcements with an increase in stock returns. However, when space reasons are given for headquarters relocation, the stock returns are negative. Research limitations/implications The sample is restricted to the USA and may not be reflective of other countries. Also, this study focuses on the initial stockholder wealth impact which may not be reflective of the long‐run effect of corporate headquarters relocation. Practical implications Organizations considering moving their head office should evaluate their decision based on the perception of their shareholders and how they may react to such announcements. Changes in the market value of the equity, caused by headquarters relocation, will have a direct impact on the firm's ability to raise capital. Originality/value This paper updates empirical research in the field and provides contrary evidence of the rationale that generates a favorable stock‐market reaction.
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How this classification was reachedexpand
Full frame machine prediction
Teacher imitationNot calibrated prevalence, not ground truth. Human validation pending. The Gemma side is a direct model label for every work in the frame, read from the title-only record. The Codex side is a classifier learned from the 10,348 direct Codex labels and calibrated to design-weighted sample rates; fields without enough sample support carry no Codex call. Candidate is the union of the two sides; consensus is their intersection. These outputs are machine_predicted_unvalidated and are not human labels.
Distilled classifier scores by category (both heads)
| Category | Codex | Gemma |
|---|---|---|
| Metaresearch | 0.001 | 0.008 |
| Meta-epidemiology (narrow) | 0.000 | 0.000 |
| Meta-epidemiology (broad) | 0.000 | 0.000 |
| Bibliometrics | 0.001 | 0.001 |
| Science and technology studies | 0.000 | 0.000 |
| Scholarly communication | 0.001 | 0.001 |
| Open science | 0.000 | 0.000 |
| Research integrity | 0.000 | 0.001 |
| Insufficient payload (model declined to judge) | 0.004 | 0.000 |
Machine scores (provisional)
The two teacher heads of the student model, read on this work. A score orders the frame for review; it never asserts a category, and the validation status ships verbatim with every row.
Baseline scores from an immature model (maturity gate not passed, 7 training rounds). Scores rank; they never assert a category.
score_only:v0-immature-baseline · verbatim from the scoring run: score_only means the number may rank works, and no category label ships from itClassification
machine, unvalidatedMachine predicted; a candidate call from one source (direct Gemma or distilled Codex), not a consensus.
How this classification was reached, model by model and score by score, is at the end of the page under "How this classification was reached".