Supply Chain Risk: Changes in Supplier Composition and Vertical Integration

85 Pages Posted: 18 Feb 2022 Last revised: 30 Sep 2022

See all articles by Nuri Ersahin

Nuri Ersahin

Michigan State University-Department of Finance

Mariassunta Giannetti

Stockholm School of Economics; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI); Swedish House of Finance

Ruidi Huang

Southern Methodist University (SMU) - Finance Department

Multiple version iconThere are 2 versions of this paper

Date Written: September 21, 2022

Abstract

Using textual analysis of earnings conference calls, we quantify firms’ supply chain risk and its sources. Our proxy for supply chain risk exhibits large cross-sectional and time-series variation that aligns with reasonable priors and is unprecedently high during the Covid-19 pandemic. Controlling for the first moment of supply chain shocks, we find that firms that experience an increase in supply chain risk increase investment and establish relationships with closer and domestic suppliers and with suppliers that are industry leaders. In addition, firms that do not face financial constraints become more likely to engage in vertical mergers and acquisitions.

Keywords: Supply chains, textual analysis, topic modeling, vertical integration, competition, M|-.1.-|As

JEL Classification: G31, G34, F15

Suggested Citation

Ersahin, Nuri and Giannetti, Mariassunta and Huang, Ruidi, Supply Chain Risk: Changes in Supplier Composition and Vertical Integration (September 21, 2022). SMU Cox School of Business Research Paper No. 22-07, Swedish House of Finance Research Paper No. 22-07, European Corporate Governance Institute – Finance Working Paper No. 848/2022, Available at SSRN: https://ssrn.com/abstract=4036798 or http://dx.doi.org/10.2139/ssrn.4036798

Nuri Ersahin (Contact Author)

Michigan State University-Department of Finance ( email )

East Lansing, MI 48824
United States
8478686532 (Phone)

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

Mariassunta Giannetti

Stockholm School of Economics ( email )

P.O. Box 6501
Sveavagen 65
SE-113 83 Stockholm
Sweden
+46 8 736 9607 (Phone)
+46 8 312 327 (Fax)

HOME PAGE: http://sites.google.com/site/mariassuntagiannetti/Home

Centre for Economic Policy Research (CEPR)

London
United Kingdom

European Corporate Governance Institute (ECGI)

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

HOME PAGE: http://www.ecgi.org

Swedish House of Finance ( email )

Drottninggatan 98
111 60 Stockholm
Sweden

Ruidi Huang

Southern Methodist University (SMU) - Finance Department ( email )

United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
449
Abstract Views
1,562
rank
95,545
PlumX Metrics