The effect of supply chain disruptions on shareholder value
Total Quality Management & Business ExcellencePublished 31 July 2008
Kevin B. Hendricks, Vinod R. Singhal
Citations66
SJR quartileQ1
SJR score0.97
SNIP1.65
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Abstract
This paper estimates the shareholder wealth affects of supply chain disruptions. The results are based on a sample of 838 disruption announcements made during 1989–2001. Shareholder wealth affects are estimated by computing the abnormal stock returns (actual returns adjusted for industry and market-wide influences) around the date when information about disruptions is publicly announced. Supply chain disruption announcements are associated with an abnormal decrease in shareholder value of 10.28%. We find that larger firms experience a less negative market reaction, and firms with higher growth prospects experience a more negative reaction. We also provide descriptive results on how sources of responsibility and reasons for disruptions affect shareholder wealth.
Keywords
Business, Management and Accounting
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