Customers' Risk Factor Disclosures and Suppliers' Investment Efficiency

• 成果类型: Article
• 署名作者: Chiu, Tzu-Ting; Kim, Jeong-Bon; Wang, Zheng
• 署名单位: Norwegian School of Economics (NHH); City University of Hong Kong; University of Waterloo
• 刊物名称: CONTEMPORARY ACCOUNTING RESEARCH
• ISSN/ISSBN: 0823-9150
• DOI: 10.1111/1911-3846.12447
• 发表日期: 2019
• 页码: 773-804
• 关键词: incomplete contracts; corporate suppliers; information quality; base concentration; capital structure; cash flow; chain; performance; FIRMS; determinants

摘要

This study examines the effect of downstream firms' (i.e., customers') risk factor disclosures contained in annual reports on the investment efficiency of upstream firms (i.e., suppliers). We find that more informative disclosures of customers' risk factors are associated with less under- or overinvestment by suppliers. In addition, this inverse association is stronger when the suppliers are at a bargaining disadvantage, when they operate in the durable goods industries, and when they are more concerned about the volatility of future demand. Overall, our results suggest that risk factor disclosures provided by firms in their annual reports contain useful information that could potentially help their suppliers achieve better investment efficiency.