The Impact of Industrial Value Chain Characteristics on Firms’ Financial Performance: Insights from the US Stock Market

Larry Li, Bo Meng, Lei Lei, Jiabai Ye and Jiemin Guo

No 928, IDE Discussion Papers from Institute of Developing Economies, Japan External Trade Organization(JETRO)

Abstract: This study explores the influence of industry-level value chain characteristics on firms’ financial performance, a subject that is frequently discussed yet rarely examined empirically. By correlating US input-output data across 405 sectors with financial information from listed companies in the US stock market, we discern a significant influence of value chain position, length, and complexity on firm financial performance, with a notable marginal effect at the industry level. Furthermore, we identify a U-shaped relation between value chain attributes and financial outcomes, aligning with the so-called “Smile Curve” phenomenon. This study offers new insights for investors aiming to make informed industry-specific investment decisions.

Keywords: Value; chain|production; network|financial; performance|US; stock; market|ROE|ROA|Tobin's; Q (search for similar items in EconPapers)
JEL-codes: C58 D57 G17 L14 (search for similar items in EconPapers)
Date: 2026-03
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Published in IDE Discussion Paper = IDE Discussion Paper, No.928. 2026-03

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