Work

Stock Market Information and Innovative Investment in the Supply Chain

Year: 2020

Type: article

Abstract: We investigate whether suppliers adjust innovative supply chain investment following stock market signals about customers’ economic prospects. We show that suppliers increase R&D and investment in customer-related patents after positive market reactions to customers’ new product announcements. A battery of falsification tests suggest that spurious factors are unlikely to explain our results. Market signals about customers appear more important when information asymmetry is greater, when suppliers face greater competitive threats, and when suppliers are financially unconstrained. Our evidence suggests that the stock market can be a viable source of information to mitigate supply chain frictions. (JEL G14, G30, L14)

Source: The Review of Corporate Finance Studies

DOI: 10.1093/rcfs/cfaa020

Authors: Lantian Liang, Ryan Williams, Steven Chong Xiao

Institutions: The University of Sydney, University of Arizona, The University of Texas at Dallas

Language: English

Topic: Corporate Finance and Governance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

SDG: Industry, innovation and infrastructure

Open Access status: green

OpenAlex ID: W3045174832

FWCI: 2.326

Cites: 63

Cited by: 24

Related to: 10