Working Paper: CEPR ID: DP17208
Authors: Nuri Ersahin; Mariassunta Giannetti; Ruidi Huang
Abstract: Using textual analysis of earnings conference calls, we quantify firm level risk arising from the reliability of the supply chain from 2002 to 2020. Our proxy for perceived supply chain risk exhibits cross-sectional and time-series variation that aligns with reasonable priors and is unprecedently high following the Covid-19 pandemic. We find that firms that face higher supply chain risk establish relationships with closer and domestic suppliers and with suppliers that are industry leaders. In addition, firms that do not face financial constraints are more likely to engage in vertical mergers and acquisitions when they face supply chain risk.
Keywords: Supply chains; Textual analysis; Vertical integration; Competition
JEL Codes: No JEL codes provided
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| supply chain risk (M11) | establish relationships with closer and domestic suppliers (L14) |
| supply chain risk (M11) | vertical mergers and acquisitions (M&A) (L22) |
| supply chain risk (M11) | increase in the number of suppliers (D16) |
| supply chain risk (M11) | probability of M&A with suppliers (L14) |
| supply chain risk (M11) | probability of M&A with customers (G34) |