Speed Matters: Supply-Chain Information Diffusion and Price Feedback Effects

50 Pages Posted: 5 Aug 2019

See all articles by Ling Cen

Ling Cen

The Chinese University of Hong Kong

Michael G. Hertzel

Arizona State University (ASU) - Finance Department

Christoph Schiller

Arizona State University (ASU) - W.P. Carey School of Business

Date Written: August 1, 2019

Abstract

This paper provides evidence of price feedback effects in a supply-chain setting using the speed with which information diffuses from customer to supplier stock prices to identify private supply-chain information in prices. We find that the speed of supply-chain information diffusion positively (negatively) affects the sensitivity of supplier investment to its own (customer’s) price. These results are consistent with learning from prices and suggest that supplier managers vary their reliance on their own versus their customer’s stock prices depending upon their relative price informativeness. Consistent with supplier managers using information in prices to make better investment decisions, we find that higher speed of supply-chain information diffusion predicts positive future supplier performance and enhances investment coordination between suppliers and customers.

Keywords: Supply Chains; Speed; Information Diffusion

JEL Classification: L14; G14; G24

Suggested Citation

Cen, Ling and Hertzel, Michael G. and Schiller, Christoph, Speed Matters: Supply-Chain Information Diffusion and Price Feedback Effects (August 1, 2019). Available at SSRN: https://ssrn.com/abstract=3430225 or http://dx.doi.org/10.2139/ssrn.3430225

Ling Cen

The Chinese University of Hong Kong ( email )

CYT Building
Sha Tin
Hong Kong, Hong Kong
Hong Kong

HOME PAGE: http:///sites.google.com/site/cenling/

Michael G. Hertzel (Contact Author)

Arizona State University (ASU) - Finance Department ( email )

W. P. Carey School of Business
P.O. Box 873906
Tempe, AZ 85287-3906
United States
480-965-6869 (Phone)
602-965-8539 (Fax)

Christoph Schiller

Arizona State University (ASU) - W.P. Carey School of Business ( email )

Tempe, AZ 85287-3706
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
154
Abstract Views
673
rank
212,351
PlumX Metrics