Abstract: By positioning in the small and medium-sized cities or the peripheral areas of large cities, manufacturing companies can obtain cost advantages in terms of land, labor, and environmental protection, but at the same time may be restricted by the backward development of local service industries. An important way for enterprises in remote areas to take advantage of the service industry in such central cities as Beijing, Shanghai, Guangzhou and Shenzhen is to set up service industry subsidiaries in those central cities. Taking the A-share manufacturing companies listed in Shanghai and Shenzhen stock exchanges from 2007 to 2019 whose headquarters are not in central cities as samples, this paper studies the influence of service industry subsidiaries located in the central cities of the manufacturing listed companies whose headquarters are not in central cities on the value of companies. The findings indicate that the listed companies that set up service industry subsidiaries in central cities have higher corporate values. Further intermediary mechanism study shows that the listed companies that set up service industry subsidiaries in central cities can better utilize the productive services of central cities, thereby increasing their operating income and gross profit margin, and ultimately increasing their corporate value.

Key words: central city, subsidiaries in the service industry, external service, company value