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

Jiangxia Liu (College of Business, Valparaiso University, Valparaiso, Indiana, USA)
Sourish Sarkar (Sam and Irene Black School of Business, Penn State Erie, The Behrend College, Pennsylvania State University, Erie, Pennsylvania, USA)
Sanjay Kumar (College of Business, Valparaiso University, Valparaiso, Indiana, USA)
Zhenhu Jin (College of Business, Valparaiso University, Valparaiso, Indiana, USA)

International Journal of Productivity and Performance Management

ISSN: 1741-0401

Publication date: 8 January 2018

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.

Keywords

Citation

Jiangxia Liu, Sourish Sarkar, Sanjay Kumar and Zhenhu Jin (2018) "An analysis of stock market impact from supply chain disruptions in Japan", International Journal of Productivity and Performance Management, Vol. 67 No. 1, pp. 192-206

Download as .RIS

DOI

: https://doi.org/10.1108/IJPPM-06-2016-0104

Publisher

:

Emerald Publishing Limited

Copyright © 2018, Emerald Publishing Limited

Please note you might not have access to this content

You may be able to access this content by login via Shibboleth, Open Athens or with your Emerald account.
If you would like to contact us about accessing this content, click the button and fill out the form.
To rent this content from Deepdyve, please click the button.