Stock price reactions to supply chain governance risks: an empirical study
Document typeMaster thesis
Rights accessRestricted access - author's decision
A widely discussed topic in the supply chain literature is how misconducts of suppliers affect the buying firm as well as the other way around. Yet little is known about the financial impact of this kind of breaches on the buying and supplying firm respectively. This study fills this gap by examining whether the shareholders are affected by supply chain governance risk announcements, as well as the effect on the supplying and buying firm. As a starting point, using stock market data, I conduct an event study to examine how firms and its suppliers and buyers react to these announcements. To do so to, I use a sample formed by 435 announcements made during 2007 and 2016 from 129 publicly traded companies, along with the suppliers and buyers of these firms. After that some stratification is made in order to understand how the specific characteristic affects the stock market in different ways. Findings suggest that there are evidences of a stock market negative reaction to these governance supply chain risk announce for the main firms. And that some issues considered in the announcements, such as Anti-competitive practices present a negative reaction for the main companies, the supplying firms and the buying firms. In a similar way the announcements from firms from the Manufacturing sector also provide evidence of negative market reaction for the main firms and the supplying firms.
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