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The Impact of Industrial Value Chain Characteristics on Firms’ Financial Performance: Insights from the US Stock Market

Author

Listed:
  • LI,Larry
  • MENG,Bo
  • LEI,Lei
  • YE,Jiabai
  • GUO,Jiemin

Abstract

This study explores the influence of industry-level value chain characteristics on firms’ financial performance, a subject that is frequently discussed yet rarely examined empirically. By correlating US input-output data across 405 sectors with financial information from listed companies in the US stock market, we discern a significant influence of value chain position, length, and complexity on firm financial performance, with a notable marginal effect at the industry level. Furthermore, we identify a U-shaped relation between value chain attributes and financial outcomes, aligning with the so-called “Smile Curve” phenomenon. This study offers new insights for investors aiming to make informed industry-specific investment decisions.

Suggested Citation

  • LI,Larry & MENG,Bo & LEI,Lei & YE,Jiabai & GUO,Jiemin, 2026. "The Impact of Industrial Value Chain Characteristics on Firms’ Financial Performance: Insights from the US Stock Market," IDE Discussion Papers 928, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    • Handle: RePEc:jet:dpaper:dpaper928
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    File URL: https://ir.ide.go.jp/record/2001768/files/IDP000928_001.pdf
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    Keywords

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    JEL classification:

    • C58 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Financial Econometrics
    • D57 - Microeconomics - - General Equilibrium and Disequilibrium - - - Input-Output Tables and Analysis
    • G17 - Financial Economics - - General Financial Markets - - - Financial Forecasting and Simulation
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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