The impact of supplier sustainability risk on shareholder value
Kim, Seongtae; Wagner, Stephan M.; Colicchia, Claudia
Stephan M. Wagner
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 supplier sustainability risks (SSRs). To this end, we conduct an event study analysis followed by regression modeling based on a sample of 196 US publicly traded firms' SSRs. The results reveal that SSRs are associated with a 1.00% 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.
|Journal Article Type||Article|
|Journal||Journal of Supply Chain Management|
|Peer Reviewed||Peer Reviewed|
|APA6 Citation||Kim, S., Wagner, S. M., & Colicchia, C. (2019). The impact of supplier sustainability risk on shareholder value. Journal of Supply Chain Management, 55(1), 71-87. doi:10.1111/jscm.12188|
|Keywords||Supplier sustainability risk; Social performance; Corporate social responsibility; Insurance-like value; Shareholder wealth|
This file is under embargo until Dec 12, 2020 due to copyright reasons.
Contact C.Colicchia@hull.ac.uk to request a copy for personal use.
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