Effect of supply chain strategic collaboration announcements on shareholder value: an empirical investigation from China

Abstract

Purpose

This study empirically examines the impact of announcements on supply chain strategic collaboration (SCSC) on companies' shareholder value.

Design/methodology/approach

This study analyzes changes in shareholder value of companies listed in China based on data of 208 SCSC announcements. The signaling theory is applied to determine correlation among SCSC announcements and the market. An event study is used to estimate the stock market reaction to SCSC announcements. The common market model estimates stock abnormal returns after the event. The least squares method and regression model calculate the model parameter value.

Findings

There is a positive and statistically significant relationship between SCSC announcement and shareholder value. Market reaction to product development collaboration is significantly higher than to technology-sharing collaboration, market collaboration, and other SCSC types. The market reacts more positively to suppliers and companies with greater supply chain control power than to buyers and companies with lower control power. Announcements from the service supply chain can lead to stronger market reactions than those from manufacturing supply chains.

Practical implications

The findings provide a systematic assessment of how SCSC announcements contribute to firms' shareholder value. The result provides a benchmark of value promotion that can be expected from SCSC announcements.

Originality/value

This study fills the research gap that using secondary data to assess changes in companies’ shareholder value caused by SCSC announcements and firstly examines these changes by constructing the signaler–signal–receiver progress based on signaling theory. The research results provide a new reference and inspiration for deeper understanding of the impact mechanism of SCSC. Furthermore, this study contributes to the development of the signaling theory using an empirical study in an emerging market, China.

Citation

Liu, W., Wei, W., Si, C., Xie, D. and Chen, L. (2020), "Effect of supply chain strategic collaboration announcements on shareholder value: an empirical investigation from China", International Journal of Operations & Production Management, Vol. 40 No. 4, pp. 389-414. https://doi.org/10.1108/IJOPM-05-2019-0368