Beyond clusters: How regional geographic signature affects firm value and risk

Geoffrey G. Bell, Saiying Deng

Research output: Contribution to journalArticlepeer-review

4 Scopus citations

Abstract

Existing studies examining how geography affects firm outcomes primarily consider how clusters affect performance. We examine how regional geographic signature-industry clusters, regional economic diversity, region size, and regional innovativeness-affects firm value and systematic and unsystematic risk using a sample of publicly traded American bank holding companies. After controlling for endogeneity of clusters, we find that locating in large and innovative regions enhances firm value, while locating in clusters and diversifying into many regions reduces value. Clusters reduce systematic risk and increase unsystematic risk, while economic diversity and innovativeness increase systematic risk. Thus, geographic locales exert multifaceted influences on value and risk, and we need to consider more than industry clusters and geographic diversification when considering geographic influence.

Original languageEnglish (US)
Pages (from-to)71-85
Number of pages15
JournalCanadian Journal of Administrative Sciences
Volume30
Issue number2
DOIs
StatePublished - Jun 1 2013

Keywords

  • Banking
  • Cluster
  • Geographic signature
  • Performance
  • Risk

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