On December 6th, Mircea Epurefrom Pompeu Fabra University, presents at ISEG the study "Moving away for Growth or from Uncertainty?".
Free admission.
Abstract:
We examine the antecedents and effects of corporate headquarters' relocations over good economic times and the Covid-19 crisis. Using Bank of Spain microdata, we first show that movers are usually older, larger, more leveraged and less capital intensive firms. When facing the unexpected shock of the pandemic, movers accessed less government funding, performed substantially worse by exiting more, and exhibited higher drops in sales and performance. To enhance our identification, we exploit relocations triggered by the political uncertainty around the October 2017 "referendum" for Catalan independence. We find that results for the general population of firms hint to a more non-market behavior, while Catalan movers display a market-like adaptation. Catalan movers were also larger, more leveraged and less capital intensive firms, but they were younger and held higher liquidity. They performed better during the pandemic, relying even less on public funding, exiting substantially less than all other firms, and exhibiting lower drops in sales-to-assets. Exploiting the heterogeneity behind the results, we highlight that key findings are stronger in low concentration industries.