An analysis of stock market impact from supply chain disruptions in Japan

Jiangxia Liu, Sourish Sarkar, Sanjay Kumar and Zhenhu Jin

International Journal of Productivity and Performance Management, 2018, vol. 67, issue 1, 192-206

Abstract: Purpose - The purpose of this paper is to explore the stock market impact of supply chain disruptions for public companies in Japan. The impact in the USA and Japan are also compared. Design/methodology/approach - Using event study on a data set comprising of disruptions announced by Japanese and US companies during year 2000-2013, the authors measure the stock price reaction to supply chain disruptions. Findings - The study finds that the Japanese companies, in an 11-day window around disruption announcement, witness an average abnormal return of −0.61 percent, which is statistically significant. In comparison to the USA, this stock decline is qualitatively smaller, yet statistically indifferent. The abnormal return is found significant in the two days before disruption announcement. However, a follow-up study with a refined data set (where the event date is the earlier of the announcement or disruption date) does not find any significant abnormal return prior to the event date. This difference from US market suggests the possibility of insider trading. Factors such as book-to-market ratio, industry type, and market capitalization did not affect the stock decline. Research limitations/implications - The research is limited to a data set from Japan and the USA. Further generalization of findings may need studies focused on other countries. Practical implications - The results are of interest for supply chain managers. The results should also help global investors in making investment decisions. Originality/value - Most supply chain disruptions management research is focused on companies in western countries. The paper is the first to test the impact of supply chain disruptions in Japan.

Keywords: Japan; Supply chain disruptions; Event studies; Stock market impact (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eme:ijppmp:ijppm-06-2016-0104

DOI: 10.1108/IJPPM-06-2016-0104

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