PurposeThe purpose of this paper is to examine how utilization of non‐financial manufacturing performance (NFMP) measures impacts the lean manufacturing/financial performance relationship.Design/methodology/approachA structural equation model (SEM) is estimated using data provided by 121 US manufacturing executives. In addition to examining direct effects, the study examines whether NFMP measurement mediates or moderates the lean manufacturing/financial performance relationship.FindingsThe results provide substantial evidence that utilization of NFMP measures mediates the relationship between lean manufacturing and financial performance.Research limitations/implicationsThe study's findings regarding NFMP measurement suggest that the mixed results of prior studies of the lean manufacturing/financial performance relationship may be due in part to a failure to account for NFMP measurement. Limitations of the study are the non‐random sample and its small sample size, relative to the SEM estimated.Practical implicationsManagers who implement lean manufacturing without utilizing supportive NFMP measures may experience disappointing financial results.Originality/valueThis is the first known study that adopts a SEM framework to examine: how NFMP measurement affects the relationship between lean production and profitability; the direct relationship between NFMP measurement and firm performance; and the impact of lean manufacturing on externally audited, objective measures of firm performance.

This study reports evidence that concentrated 3‐firm supply chains achieve superior financial performance, and that supply chains’ financial performance varies systematically with measures of chain concentration and chain duration. Results from firm‐level analyses suggest that the profitability benefits of supply chain relationships are captured predominantly by downstream chain members, whereas cash cycle benefits are realized throughout the supply chain. Firm‐level tests also reveal that chain members’ financial performance varies systematically with measures of downstream bargaining power, downstream relationship duration, and degree of supply consolidation. The study's chain‐ and firm‐level analyses employ data extracted from sample firms’ publicly available financial reports, including their major customer disclosures under Statement of Financial Accounting Standards Nos. 131 (1997) and 14 (1976).

Empirical research provides scant evidence that just-in-time (JIT) adopters outperform their non-adopting industry peers. Using a sample of 201 JIT adopters and matched non-adopters, we examine the relation between financial performance and JIT. Our sample-wide results indicate that JIT adopters improve financial performance relative to non-adopters, and that profit margin, rather than asset turnover, is the primary source of such improvement. However, results of additional analyses suggest that JIT adopters below a firm-size threshold do not improve financial performance, a finding that reconciles our study to Balakrishnan et al. (1996), which examined a JIT adopter sample that included a greater proportion of small firms.

We examine the fi nancial and valuation consequences of corporate inversion using a sample of 12 inversion fi rms and 24 matched fi rms. We fi nd that fi rms' effective tax rates (ETRs) decline substantially following inversion. Based on pre-to post-inversion changes in foreign profi t margin, U.S. profi t margin, and the geographic composition of pre-tax income, we infer that inversion-related ETR reductions are due to U.S. earnings stripping. For four fi rms, we provide evidence that intercompany debt is the mechanism used to strip earnings. Finally, we fi nd that abnormal returns at shareholder approval dates are associated with inverted fi rms' realized ETR changes.1 For example, in a November 2, 2001 letter to shareholders, Ingersoll-Rand CEO Herbert L. Henkel stated that inverting "should help enhance our business growth and cash fl ow and reduce our worldwide effective tax rate."

This study examines supply chain power in the context of real earnings management (REM), instances in which executives execute (or forego) operations transactions for the sole purpose of meeting or beating earnings targets. We examine whether powerful major customers in supply chains exploit their positions to engage in REM to a greater degree than less powerful firms. We also examine (1) whether the stock market reacts differently to major customers’ and nonmajor customers’ REM, (2) whether any difference exists between major customers’ and nonmajor customers’ post‐REM financial performance, and (3) how suppliers are impacted by their major customers’ REM behavior. Results suggest that major customers exploit their supply chain power to engage in more REM. In contrast to the skeptical stock market reaction when other firms engage in REM, we find no evidence that major customers’ earnings are discounted when there is evidence of REM. Instead, the market appears to interpret major customers’ behavior as “legitimate” uses of power in supply chain management, rather than REM typically considered to be value‐destroying. Further, we find that in post‐REM periods, major customers that engage in REM exhibit better operating cash flow performance than nonmajor customers who do so. These findings suggest that the consequential costs of REM are lower for major customers than for nonmajor customers. Finally, we report evidence that the particular form of major customers’ REM appears to determine the impact on their suppliers. Suppliers’ financial performance deteriorates when major customers’ REM entails discretionary expense cuts. These findings offer new insights into the benefits and uses of power in supply chain relationships, in a previously unexplored context. We discuss the implications of the findings for future research.