The bright side of supplier concentration: Investor attitudes towards the reopening policy in China

Jie Su

PLOS ONE, 2024, vol. 19, issue 11, 1-24

Abstract: Supplier concentration (SUC) has disadvantage of vulnerability along with cost savings and efficiency. While current scholarship focus on the vulnerability of firms with centralized suppliers during the COVID-19 epidemic, there is no empirical study that explores the impact of post-disaster SUC on firm value as countries removing regional isolation policy. I focus on the impact of COVID-19 reopening policy on investor attitudes towards SUC after the resolution of a supply chain disruption crisis. I try to examine whether investors still perceive SUC as a risk signal or as a positive signal for rapid recovery. Using the event shock of China’s reopening announcement and data on A-share listed companies, I find that SUC has a positive impact on cumulative abnormal returns at reopening. I also find that positive effect of SUC is more prominent for firms that benefit from a larger reduction in transaction costs due to the reopening policy. I also analyze the moderating effect and find that information intermediaries such as analysts and media attention amplify the positive effects of SUC. My research provides new perspective on achieving post-disaster value enhancement through SUC.

Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:plo:pone00:0313682

DOI: 10.1371/journal.pone.0313682

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