An analysis of stock market impact from supply chain disruptions in Japan

Jiangxia Liu, Sourish Sarkar, Sanjay Kumar, Zhenhu Jin

Research output: Contribution to journalArticle

Abstract

Purpose: The purpose of this paper is to explore the stock market impact of supply chain disruptions for public companies in Japan. The impact in the USA and Japan are also compared. Design/methodology/approach: Using event study on a data set comprising of disruptions announced by Japanese and US companies during year 2000-2013, the authors measure the stock price reaction to supply chain disruptions. Findings: The study finds that the Japanese companies, in an 11-day window around disruption announcement, witness an average abnormal return of −0.61 percent, which is statistically significant. In comparison to the USA, this stock decline is qualitatively smaller, yet statistically indifferent. The abnormal return is found significant in the two days before disruption announcement. However, a follow-up study with a refined data set (where the event date is the earlier of the announcement or disruption date) does not find any significant abnormal return prior to the event date. This difference from US market suggests the possibility of insider trading. Factors such as book-to-market ratio, industry type, and market capitalization did not affect the stock decline. Research limitations/implications: The research is limited to a data set from Japan and the USA. Further generalization of findings may need studies focused on other countries. Practical implications: The results are of interest for supply chain managers. The results should also help global investors in making investment decisions. Originality/value: Most supply chain disruptions management research is focused on companies in western countries. The paper is the first to test the impact of supply chain disruptions in Japan.

Original languageEnglish (US)
Pages (from-to)192-206
Number of pages15
JournalInternational Journal of Productivity and Performance Management
Volume67
Issue number1
DOIs
StatePublished - Jan 1 2018

Fingerprint

Supply chain disruptions
Japan
Stock market
Market impact
Disruption
Announcement
Abnormal returns
Investment decision-making
Design methodology
Market capitalization
Factors
Management research
Industry
Investors
Book-to-market ratio
Stock price reaction
Disruption management
Managers
Supply chain
Event study

All Science Journal Classification (ASJC) codes

  • Business, Management and Accounting(all)
  • Strategy and Management

Cite this

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abstract = "Purpose: The purpose of this paper is to explore the stock market impact of supply chain disruptions for public companies in Japan. The impact in the USA and Japan are also compared. Design/methodology/approach: Using event study on a data set comprising of disruptions announced by Japanese and US companies during year 2000-2013, the authors measure the stock price reaction to supply chain disruptions. Findings: The study finds that the Japanese companies, in an 11-day window around disruption announcement, witness an average abnormal return of −0.61 percent, which is statistically significant. In comparison to the USA, this stock decline is qualitatively smaller, yet statistically indifferent. The abnormal return is found significant in the two days before disruption announcement. However, a follow-up study with a refined data set (where the event date is the earlier of the announcement or disruption date) does not find any significant abnormal return prior to the event date. This difference from US market suggests the possibility of insider trading. Factors such as book-to-market ratio, industry type, and market capitalization did not affect the stock decline. Research limitations/implications: The research is limited to a data set from Japan and the USA. Further generalization of findings may need studies focused on other countries. Practical implications: The results are of interest for supply chain managers. The results should also help global investors in making investment decisions. Originality/value: Most supply chain disruptions management research is focused on companies in western countries. The paper is the first to test the impact of supply chain disruptions in Japan.",
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An analysis of stock market impact from supply chain disruptions in Japan. / Liu, Jiangxia; Sarkar, Sourish; Kumar, Sanjay; Jin, Zhenhu.

In: International Journal of Productivity and Performance Management, Vol. 67, No. 1, 01.01.2018, p. 192-206.

Research output: Contribution to journalArticle

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