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Does supplier concentration matter to investors during the COV1D-19 crisis: evidence from China?

ABSTRACT: The literature shows that investor attention to customer-supplier disclosure increases when suppliers' information arrival is anticipated. Due to the widespread of city lockdowns in China and the implementation of social distancing to control the COVID-19 pandemic, investor attention to potential disruption of the supply chain spikes, leading to a price devaluation for firms with high supplier concentration risk. We find that a higher degree of supplier concentration is related to more serious stock price declines over the short-term and medium-term windows right after the Wuhan lockdown. This result lends support to the argument that the concentration risk of suppliers is a significant consideration for China stock market investors, especially under the potential financial distress at the firm level induced by the COVID-19 crisis.

SUBMITTER: Cheng LTW

PROVIDER: S-EPMC9510340 | biostudies-literature | 2022

REPOSITORIES: biostudies-literature

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Does supplier concentration matter to investors during the COV1D-19 crisis: evidence from China?

Cheng Louis T W LTW Poon Jack S C JSC Tang Shaolong S Wang Jacqueline Wenjie JW

Financial innovation 20220926 1

The literature shows that investor attention to customer-supplier disclosure increases when suppliers' information arrival is anticipated. Due to the widespread of city lockdowns in China and the implementation of social distancing to control the COVID-19 pandemic, investor attention to potential disruption of the supply chain spikes, leading to a price devaluation for firms with high supplier concentration risk. We find that a higher degree of supplier concentration is related to more serious s ...[more]

PMID: 36189117

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