CAUSES AND CONSEQUENCES OF SUPPLY CHAIN TRANSPARENCY: EVIDENCE FROM SUPPLIER IDENTITY DISCLOSURE.

Abstract

This study examines the determinants and consequences of managers’ choices to disclose the identity about their firm’s first-tier suppliers. I find that reputational benefits, informational benefits, and proprietary costs are important determinants in a firm’s voluntary disclosure choices regarding the identity of suppliers. Further analyses reveal that both shareholders and financial intermediaries find supplier identity disclosures useful. I find that shareholder response to supply chain risk events is timelier for firms that disclose supplier identity. Moreover, supplier identity disclosure appears to help analysts improve earnings forecast accuracy. Taken together, my results shed light on the cost-benefit tradeoffs faced by firms in disclosing supplier identity and how capital market participants use the information disclosed.