Global Outsourcing and Voluntary Disclosure

Journal of Business Finance and Accounting, Forthcoming

68 Pages Posted: 24 Aug 2020 Last revised: 29 Nov 2023

See all articles by Lili Dai

Lili Dai

University of New South Wales (UNSW)

Rui Dai

Wharton Research Data Services (WRDS); The Chinese University of Hong Kong, Shenzhen (CUHK-Shenzhen)

Lilian Ng

Schulich School of Business, York University; European Corporate Governance Institute (ECGI)

Zihang Ryan Peng

University of New South Wales

Date Written: November 24, 2023

Abstract

Reliance on global outsourcing has become an economic imperative for many major corporations worldwide, but at the same time, it has brought substantial risks and complexities to these firms. This study employs novel international supply chain data to examine whether global outsourcing of goods or services shapes U.S. corporate disclosure policies. Our main results suggest a negative impact of global outsourcing exposure on voluntary disclosure, and several identification tests further support this baseline evidence. We find that the adverse effect on disclosure is more pronounced when institutional differences are more significant between the U.S. and foreign suppliers’ countries and when U.S. firms face higher litigation risks. However, the effect weakens when investors and stakeholders demand more information. Collectively, our study provides new insights into the economic implications of outsourcing globally from an information disclosure perspective.

Keywords: Global Outsourcing, Voluntary Disclosure; Supply Network

JEL Classification: F23, G14, M41

Suggested Citation

Dai, Lili and Dai, Rui and Ng, Lilian and Peng, Zihang Ryan, Global Outsourcing and Voluntary Disclosure (November 24, 2023). Journal of Business Finance and Accounting, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3674690 or http://dx.doi.org/10.2139/ssrn.3674690

Lili Dai (Contact Author)

University of New South Wales (UNSW) ( email )

Kensington
High St
Sydney, NSW 2052
Australia

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

Rui Dai

Wharton Research Data Services (WRDS) ( email )

3819 Chestnut St
Suite 300
Philadelphia, PA 19104
United States

The Chinese University of Hong Kong, Shenzhen (CUHK-Shenzhen)

Lilian Ng

Schulich School of Business, York University ( email )

N223, Seymour Schulich Building
4700 Keele Street
Toronto, Ontario ON M3J 1P3
Canada
+1.416.736.2100 x77994 (Phone)

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Zihang Ryan Peng

University of New South Wales ( email )

Kensington
High St
Sydney, NSW 2052
Australia

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