재무연구 제 권 호 (2012년 5월)
Asian Review of Financial Research, Vol., No..
pp.1802~1875
pp.1802~1875
Supply-Chain Spillover Effects and the Interdependence of Firm Financing Decisions
William C. Johnson Whittemore School of Business and Economics, University of New Hampshire, Durham, NH 03824,
Jun-Koo Kang Division of Banking and Finance, Nanyang Business School, Nanyang Technological University, Singapore
Ronald Masulis Australian School of Business, University of New South Wales
Sangho Yi The Sogang Business School, Sogang University, Seoul, South Korea
We analyze spillover effects of supplier equity financing decisions to assess the importance of major trading relationships in creating interdependent valuation effects. We find supplier issuance decisions have important negative spillover effects for large customers, which are more pronounced as information asymmetry or economic dependence of suppliers and customers rises, relationship-specific investment increases, or more valuable product guarantees are offered. Furthermore, customer incentives to maintain supplier relationships are undercut by supplier equity financing decisions, leading to shorter post-issuance trading relationships and larger declines in relationship-specific investments. Our results provide strong evidence of financial and investment policy interdependence across major supply chain members.
William C. Johnson
Jun-Koo Kang
Ronald Masulis
Sangho Yi
We analyze spillover effects of supplier equity financing decisions to assess the importance of major trading relationships in creating interdependent valuation effects. We find supplier issuance decisions have important negative spillover effects for large customers, which are more pronounced as information asymmetry or economic dependence of suppliers and customers rises, relationship-specific investment increases, or more valuable product guarantees are offered. Furthermore, customer incentives to maintain supplier relationships are undercut by supplier equity financing decisions, leading to shorter post-issuance trading relationships and larger declines in relationship-specific investments. Our results provide strong evidence of financial and investment policy interdependence across major supply chain members.
