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The Influence of Listed Companies’ Their Location on Stock Price

Location, or economic location, refers to the economic growth zone and its radiation scope geographically. Economic growth zone is the area where capital, technology and other economic factors are highly accumulated, and it is also an area of rapid economic development. The Silicon Valley high-tech industrial zone in the United States is an example of economic growth zone. The rise and development of economic zone will greatly drive the economic growth of its surrounding areas.

The investment value of listed companies is closely related to the development of regional economy. The listed companies in economic zone generally have higher investment value. Because when we analyze the location of listed companies, we usually connect the investment value of listed companies with the development of regional economy. By analyzing natural conditions, resource conditions, industrial policies and government support of listed companies, investors can evaluate the advantages and prospects of listed companies, finally identifying the investment value of listed companies.

Specifically, we can analyze the location of listed companies through the following aspects:

1. Natural and basic conditions within the location

Natural and basic conditions include mineral resources, water resources, energy, transportation, communication facilities, etc. They play an important role in the development of regional economy. The analysis of the natural and basic conditions in the region is conducive to the analysis of related listed companies.

If a company engages in an industry which does not conform to the local natural and basic conditions, the development of the company may face lots of restrictions. For example, if a company engaged in water-consuming projects in inland areas where water resources are scarce, its project was hard to have optimistic progress.

2. Industrial policy within the location

In order to further promote the development of regional economy, the local government generally formulates a strategic planning of economic development, puts forward corresponding industrial policies, determines the industries which are given priority to development. Besides, there also will be some preferential measures in finance, credit and taxation.

These measures are conducive to guiding and promoting the development of corresponding industries. If the core business of a listed company within the location meets the requirements of local government industrial policy, it will receive corresponding government support, which is beneficial to the company’s further development.

3. Characteristics within the location

The so-called characteristics are the result of the comparison among different regions. It refers to differences compared to other locations, which involves the economic development environment, economic development status and other aspects. To some extent, characteristics mean advantages, which are good starting points for local economic development as well as companies' growth.

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