Working Paper: NBER ID: w31134
Authors: Nuri Ersahin; Mariassunta Giannetti; Ruidi Huang
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. In addition, a firm exhibits high supply chain risk when its suppliers also do so. We find that firms that experience an increase in supply chain risk establish relationships with closer and domestic suppliers and with suppliers that are industry leaders, but also continue to work with suppliers in other continents. In addition, firms that do not face financial constraints become more likely to engage in vertical mergers and acquisitions.
Keywords: supply chain risk; vertical integration; supplier composition; textual analysis
JEL Codes: F15; G31; G34
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| supply chain risk (M11) | supplier composition (L14) |
| supply chain risk (M11) | vertical mergers and acquisitions (L22) |
| supply chain risk (M11) | stock price volatility (G17) |
| supply chain sentiment (L81) | supply chain risk (M11) |
| supply chain risk (M11) | complexity of supply chain (M11) |
| supply chain risk (M11) | geographical distribution of suppliers (D39) |