Business, Management and Accounting
8 years ago

Supply chain disruptions lead to 40% stock price drop and increased equity risk.

Production and Operations Management
An Empirical Analysis of the Effect of Supply Chain Disruptions on Long‐Run Stock Price Performance and Equity Risk of the Firm
Kevin B. Hendricks, Vinod R. Singhal

Paper Summary

Related papers

Economics, Econometrics and Finance
8 years ago

Gold prices impact stock returns in BRIC countries, study finds.

Oil Price Shocks
Economics, Econometrics and Finance
8 years ago

Stock price misleads investors, impacts news on stock returns significantly.

Asset Pricing
Oil Price Shocks
Earnings Management
Business, Management and Accounting
4 years ago

Analysts' stock ownership boosts recommendations but skews target price forecasts.

Earnings Management
Asset Pricing
Corporate Governance

Supply chain disruptions can significantly impact a company's stock price and equity risk. A study of 827 disruption announcements from 1989 to 2000 found that firms experiencing disruptions saw an average abnormal stock return of nearly -40%. This underperformance was most pronounced in the year before, the day of, and the year after the announcement. Firms did not quickly recover from these negative effects. Additionally, the equity risk of the firm increased by 13.50% in the year following the disruption announcement compared to the year before.