Supplier Internal Control Quality and the Duration of Customer-Supplier Relationships

• 成果类型: Article
• 署名作者: Bauer, Andrew M.; Henderson, Darren; Lynch, Daniel P.
• 署名单位: University of Waterloo; Wilfrid Laurier University; University of Wisconsin System; University of Wisconsin Madison
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr-51889
• 发表日期: 2018
• 页码: 59-82
• 关键词: CORPORATE GOVERNANCE; INTERFIRM RELATIONSHIPS; Accounting information; control deficiencies; material weaknesses; chain relationships; performance; POWER; firm; MARKET

摘要

Internal controls influence information quality, thus affecting the ability of supply chain partners, who rely on collaborative systems of information sharing, to reliably contract. Using SOX-related internal control assessments as a proxy for internal control quality and U.S. GAAP-mandated major customer disclosures, we find that supplier internal control quality influences supply chain relationship duration. Specifically, our evidence demonstrates that: (1) poor internal control quality increases the likelihood of subsequent customer-supplier relationship termination; (2) timely control weakness remediation attenuates termination likelihood; and (3) weaknesses affecting customer contracting drive the effect of internal control quality on relationship termination. Our results control for supplier operational quality and performance, and are robust to propensity score matching techniques, controls for reverse causality, and alternative proxies for relationship termination and internal control quality. Overall, our findings are consistent with customers viewing strong supplier controls as important, albeit overlooked, contracting elements with significant implications for supply chain relationships.