Supply Chain Risk: Changes in Supplier Composition and Vertical Integration

Authors

Nuri Ersahin, Southern Methodist University (SMU) - Finance DepartmentFollow
Mariassunta Giannetti, Stockholm School of Economics; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI); Swedish House of FinanceFollow
Ruidi Huang, Southern Methodist University (SMU) - Finance DepartmentFollow

Publication Date

11-16-2023

Abstract

Using textual analysis of earnings conference calls, we quantify firms’ supply chain risk and explore how firms react when supply chain risk increases. We show that firms with supply chains that span across continents, multinationals, and firms with fewer suppliers of an input face higher supply chain risk. In addition, firms exhibit high supply chain risk when their suppliers also do so. Firms manage supply chain risk by establishing relationships with closer and domestic suppliers and with suppliers that are industry leaders and by vertically integrating, but they continue to work with suppliers in other continents.

Document Type

Article

Keywords

Supply chains, nearshoring, fragmentation, textual analysis, vertical integration, M&As

DOI

10.2139/ssrn.4036798

Source

SMU Cox: Finance (Topic)

Language

English