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Abstract
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.
Original language | English |
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Pages (from-to) | 773–804 |
Journal | Contemporary Accounting Research |
Volume | 36 |
Issue number | 2 |
Online published | 1 Aug 2018 |
DOIs | |
Publication status | Published - 2019 |
Bibliographical note
Research Unit(s) information for this publication is provided by the author(s) concerned.Research Keywords
- investment efficiency
- risk factor disclosure
- supply chain
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Dive into the research topics of 'Customers’ Risk Factor Disclosures and Suppliers’ Investment Efficiency'. Together they form a unique fingerprint.Projects
- 1 Finished
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GRF: Effect of Customers Risk Factor Disclosures on the Suppliers Relationship-specific Investment and Investment Efficiency
WANG, Z. (Principal Investigator / Project Coordinator), Chiu, T.-T. (Co-Investigator) & KIM, J. B. (Co-Investigator)
1/01/16 → 5/06/19
Project: Research