Supply Chain Risk: Changes in Supplier Composition and Vertical Integration
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
85 Pages Posted: 18 Feb 2022 Last revised: 30 Sep 2022
There are 2 versions of this paper
Supply Chain Risk: Changes in Supplier Composition and Vertical Integration
Supply Chain Risk: Changes in Supplier Composition and Vertical Integration
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: Suggested Citation