Effects of supply chain quality event announcements on stock market reaction: an empirical study from China

Abstract

PurposeThis study aims to explore the impact of supply chain quality event (SCQE) announcements on enterprises’ stock market value.Design/methodology/approachThis study adopts the event study approach and analyzes the changes in shareholder value of companies listed in China based on data from 118 SCQE announcements. In the event study, the market, market-adjusted and Carhart four-factor models are used to estimate abnormal stock market returns, and a cross-sectional regression model is performed to examine the effects of SCQE announcements on enterprises’ stock market value.FindingsSCQE announcements have a negative impact on shareholder value. From the perspective of the supply chain network structure, the market reacts more negatively to SCQE announcements issued by the enterprises with higher supply chain concentration. From the perspective of companies’ characteristics, announcements that do not reflect the establishment of supply chain quality cooperation have a more negative effect on stock market value, which indicates that the supply chain network structure and firm-level characteristic can moderate the market reaction.Practical implicationsThe findings demonstrate a quantitative evaluation of how SCQE announcements affect the stock market value of listed companies and provide guidance for managers to enhance the value of SCQE announcements.Originality/valueThis study fills the research gap on the impact of SCQE announcements on stock market value by using secondary data and first explores the relationship between SCQE announcements and stock market value from the perspective of supply chain network. Furthermore, this study contributes to the literature on SCQE using an empirical study in China.