Impact of product recall announcements on retailers׳ financial value

Ni, John; Flynn, Barbara B.; Jacobs, F. Robert

doi:10.1016/j.ijpe.2014.03.014

Cited by 72 publications

(58 citation statements)

References 73 publications

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“…Our empirical result within the supply chain context is in line with those of prior studies in other domains. For example, Bartley and Child (2011) estimated the stock market reaction to anti-sweatshop campaigns from 1993 to 2000 (n = 39), while Ni et al (2014) focused on the reactions to private label product recalls from 2000 to 2009 (n = 164). Their examination of U.S. firms found similar shareholder value losses: anti-sweatshop campaigns (CAR [À1, 0] = À1.26 percent) and product recall events (CAR [À1, 0] = À1.17 percent).…”

Section: Discussionmentioning

confidence: 99%

“…Chen and Lee (2017) argued that this kind of risk can be discovered by product audits and/or inspections (e.g., retailers' product audits, see McQueen, 2007). Compared with process-related issues, this topic seems to have received slightly more attention (e.g., Ni, Flynn & Jacobs, 2014;Zhao, Li & Flynn, 2013) in OSCM research, but from a typical (pure) risk perspective. In contrast, in this study, we focus on product quality and safety issues resulting from unethical supplier behavior (e.g., intentional acts).…”

Section: Types Of Ssrmentioning

confidence: 99%

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The Impact of Supplier Sustainability Risk on Shareholder Value

Kim¹,

Wagner²,

Colicchia

2018

J Supply Chain Manag

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Business scandals like sweatshop labor have received growing attention in the field of supply management. Yet little is known about how detrimental such scandals are to buying firms. This study aims to fill this gap by examining the magnitude of the consequences of what are termed as supplier sustainability risks (SSRs). To this end, we conduct an event study analysis followed by regression modeling based on a sample of 196 U.S. publicly traded firms’ SSRs. The results reveal that SSRs are associated with a 1.00 percent reduction in shareholder wealth. The market reacts negatively but not differently to the two types of SSR: process‐related risks and product‐related risks. Finally, a firm's moral capital does play a mitigating role for SSRs and process‐related risks; however, it does not provide insurance‐like protection for product‐related risks.

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Section: Discussionmentioning

confidence: 99%

Section: Types Of Ssrmentioning

confidence: 99%

The Impact of Supplier Sustainability Risk on Shareholder Value

Kim¹,

Wagner²,

Colicchia

2018

J Supply Chain Manag

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“…We focus on the auto industry because it is a significant and visible component of the equity market, and it receives more product complaints than any other industry, and results in the costliest product recalls (Chen and Nguyen, 2013;Ni et al, 2014). Prior studies also find that the announcement of an auto recall attracts wide media coverage and is often accompanied by a negative stock price reaction (Jarrell and Peltzman,1985;Pruitt and Peterson, 1986;Hoffer et al, 1988;Bromiley and Marcus, 1989;Chu et al, 2005).…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Trading Concentration and Industry-Specific Information: An Analysis of Auto Complaints

Geiger,

Keskek,

Kumas

2018

SSRN Journal

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We investigate whether sophisticated investors' trading concentration in the auto industry is associated with their use of auto complaint data. We find that the extent to which mutual funds incorporate the complaint information into their trading decisions is positively associated with their concentration of trading in the auto industry. We provide direct evidence that information advantage can arise from superior information processing. We find that pension funds, regardless of their level of trading concentration, do not use the customer complaint information to inform their trading decisions. Our findings suggest that pension funds concentrate trading for reasons other than information advantage. JEL Classification: G14 1.information advantage reason predicts a purely positive relation (Kacperczyk et al., 2005;Ekholm and Maury, 2014;Hiraki et al., 2015). However, prior research has generally not identified nor investigated the kind of information advantage utilized by concentrated investors.Information advantage can occur in two ways: 1) obtaining private information (i.e., information asymmetry), and 2) superior processing or analysis of public information based on the investor's superior ability, prior experience, knowledge or expertise (i.e., specialization) (Bodnaruk and Simonov, 2015). In fact, most studies on investment concentration generally conclude that it is due to information advantage without any attempt to determine the cause. (e.g., Brands et al., 2005;Baks et al., 2006). Moreover, most earlier studies either do not distinguish between the underlying source of information advantage (e.g., Kacpercyzk et al., 2005) or assume that it arises from private information without testing this assumption (e.g., Ekholm and Maury, 2014;Jiang and Sun, 2014). Examination of specific sources of possible information advantage, or its use by investors, is sparse, perhaps because testing the information advantage reason for investor behavior is difficult as the nature, timing, and information content of an investor's actual information set is usually unobservable by researchers. Specifically, the possibility of investment concentration occurring out of an investor's superior ability to utilize public information rather than having access to private information has yet to be examined. In this study, we address this issue by utilizing a value relevant, industry-specific information source that is available to all investors that could be exploited as an informational advantage, if a sophisticated investor so desired. Specifically, we examine whether institutional investors that have greater trading concentration in the auto industry are more likely to exploit the product complaint data freely available from the National Highway Traffic Safety Administration (NHTSA). We examine the

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“…Over the years, the supply chain has been studied by many researchers [2,3]. Today's research is interested in focusing on the extensive use of the supply chain, such as making production strategies [4], developing procurement plans [5], pricing [6,7], financing [8][9][10].…”

Section: Motivationmentioning

confidence: 99%

Optimal Financing Decisions of Two Cash-Constrained Supply Chains with Complementary Products

Chen

Xin

2016

Sustainability

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Abstract:In recent years; financing difficulties have been obsessed small and medium enterprises (SMEs); especially emerging SMEs. Inter-members' joint financing within a supply chain is one of solutions for SMEs. How about members' joint financing of inter-supply chains? In order to answer the question, we firstly employ the Stackelberg game to propose three kinds of financing decision models of two cash-constrained supply chains with complementary products. Secondly, we analyze qualitatively these models and find the joint financing decision of the two supply chains is the most optimal one. Lastly, we conduct some numerical simulations not only to illustrate above results but also to find that the larger are cross-price sensitivity coefficients; the higher is the motivation for participants to make joint financing decisions; and the more are profits for them to gain.

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Impact of product recall announcements on retailers׳ financial value

Cited by 72 publications

References 73 publications

The Impact of Supplier Sustainability Risk on Shareholder Value

The Impact of Supplier Sustainability Risk on Shareholder Value

Trading Concentration and Industry-Specific Information: An Analysis of Auto Complaints

Optimal Financing Decisions of Two Cash-Constrained Supply Chains with Complementary Products

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