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

Author

Listed:
  • Jiangxia Liu
  • Sourish Sarkar
  • Sanjay Kumar
  • Zhenhu Jin

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.

Suggested Citation

  • Jiangxia Liu & Sourish Sarkar & Sanjay Kumar & Zhenhu Jin, 2018. "An analysis of stock market impact from supply chain disruptions in Japan," International Journal of Productivity and Performance Management, Emerald Group Publishing Limited, vol. 67(1), pages 192-206, January.
  • Handle: RePEc:eme:ijppmp:ijppm-06-2016-0104
    DOI: 10.1108/IJPPM-06-2016-0104
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    Citations

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    Cited by:

    1. Baghersad, Milad & Zobel, Christopher W., 2021. "Assessing the extended impacts of supply chain disruptions on firms: An empirical study," International Journal of Production Economics, Elsevier, vol. 231(C).
    2. Tamoor Azam & Songjiang Wang & Muhammad Mohsin & Muhammad Nazam & Muhammad Hashim & Sajjad Ahmad Baig & Muhammad Zia-ur-Rehman, 2021. "Does Stakeholder Pressure Matters in Adopting Sustainable Supply Chain Initiatives? Insights from Agro-Based Processing Industry," Sustainability, MDPI, vol. 13(13), pages 1-30, June.
    3. Yanjing Jia & Chao Ding & Zhiliang Dong, 2021. "Transmission Mechanism of Stock Price Fluctuation in the Rare Earth Industry Chain," Sustainability, MDPI, vol. 13(22), pages 1-21, November.
    4. Robiyanto Robiyanto & Fanny Yunitaria, 2022. "Dividend announcement effect analysis before and during the COVID-19 pandemic in the Indonesia Stock Exchange," SN Business & Economics, Springer, vol. 2(2), pages 1-20, February.

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