In the population of over 1.7 million Texan sales-tax collecting
business establishments, we show that greater distance to owner
headquarters is associated with shorter establishment longevity.
For the lodging industry, where we have revenue data, increases in
distance to headquarters due to HQ-moving owners or acquisitions
are associated with reductions in revenues per room. We argue that
this detrimental distance effect is robust and causal, arising even
when we control for the potential endogeneity of HQ distance using
instrumental variable and matched pair analyses. We interpret this
as evidence of monitoring and local information asymmetry
problems for distant owners.
"Too Far Away? The Effect of Distance to Headquarters on Business Establishment Performance."
American Economic Journal: Microeconomics,
Asymmetric and Private Information; Mechanism Design
Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance
Firm Performance: Size, Diversification, and Scope
Other Production and Pricing Analysis