TY  - UNPD
A1  - Bao, Yangming
A1  - Goetz, Martin R.
T1  - Local peer effects and corporate investment
T2  - SAFE working paper series ; No. 220
N2  - We examine how a firms' investment behavior affects the investment of a neighboring firm. Economic theory yields ambiguous predictions regarding the direction of firm peer effects and consistent with earlier work, we find that firms display similar investment behavior within an area using OLS analysis. Exploiting time-variation in the rise of U.S. states' corporate income taxes and utilizing heterogeneity in firms' exposure to increases in corporate income tax rates, we identify the causal impact of local firms' investments. Using this as an instrumental variable in a 2SLS estimation, we find that an increases in local firms' investment reduces the investment of a local peer firm. This effect is more pronounced if local competition among firms is stronger and supports theories that firm investments are strategic substitutes due to competition.
T3  - SAFE working paper - 220 
KW  - investments
KW  - peer effects
KW  - agglomeration
KW  - corporate income tax
Y1  - 2018
UR  - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/47204
UR  - https://nbn-resolving.org/urn:nbn:de:hebis:30:3-472046
UR  - https://ssrn.com/abstract=3230794
IS  - July 7, 2018
PB  - SAFE
CY  - Frankfurt am Main
ER  -