Urban Vibrancy and Firm Value Creation

City level differences in industry-adjusted Tobin's q, an estimate of the value created for shareholders, are large, and have widened sharply over the last twenty years. Proxies for a city's appeal to high-skill workers, such as existing education rates and favorable weather, are strongly associated with Tobin's q, both in levels and changes. These results indicate that shareholders have recently captured a bigger part of the benefits associated with superior locations. The higher stock prices of firms in these locations appear to be driven by future growth opportunities, rather than improvements in current operating efficiency