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Fangjun Sang_Dissertation_v1.pdf (941.7 KB)

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The Ripple Effect of Major Customer Litigation Risk on Suppliers’ Firm Valuation, Operating Performance, and Strategic Decisions

Sang, Fangjun, Sang
http://rave.ohiolink.edu/etdc/view?acc_num=kent1576790987634493

Abstract Details

2018, PHD, Kent State University, College of Business and Entrepreneurship, Ambassador Crawford / Department of Accounting.
Shareholder litigation against public companies has long been viewed as an important disciplinary mechanism of the U.S. capital market. While the extant literature has extensively documented litigation effects on horizontal dimensions, i.e. defendant firms and their peers, it lacks evidence on the litigation effect across vertical dimensions, the effect of defendant firms’ litigation on their suppliers. This study examines the litigation effect in the supply chain relationship context, specifically the adverse effect of major customer’s litigation exposure on suppliers’ firm valuation, operating performance, and strategic decision-making. The study finds that there are negative market reactions to the suppliers’ stock price around the major customer’s litigation event. Using the (-1, +1) event window, this study finds that suppliers’ average economic loss is $13.2 million, suggesting the economic significance of the adverse ripple effect. Such negative price reaction is more severe if the supplier has greater dependency on the major customer. The results are not driven by litigation severity, confirming the extensive existence of the ripple effect in the supply chain relationship. The study does not find that the major customer’s litigation affects suppliers’ operating performance and strategic decision-making following the litigation event.
Indrarini Laksmana (Committee Chair)
Shunlan Fang (Committee Member)
Eric Johnson (Committee Member)
96 p.
Accounting
Litigation; Major Customer; Supply Chain; Accounting; Firm Valuation

Recommended Citations

Citations

  • Sang, Sang, F. (2018). The Ripple Effect of Major Customer Litigation Risk on Suppliers’ Firm Valuation, Operating Performance, and Strategic Decisions [Doctoral dissertation, Kent State University]. OhioLINK Electronic Theses and Dissertations Center. http://rave.ohiolink.edu/etdc/view?acc_num=kent1576790987634493

    APA Style (7th edition)

  • Sang, Sang, Fangjun. The Ripple Effect of Major Customer Litigation Risk on Suppliers’ Firm Valuation, Operating Performance, and Strategic Decisions . 2018. Kent State University, Doctoral dissertation. OhioLINK Electronic Theses and Dissertations Center, http://rave.ohiolink.edu/etdc/view?acc_num=kent1576790987634493.

    MLA Style (8th edition)

  • Sang, Sang, Fangjun. "The Ripple Effect of Major Customer Litigation Risk on Suppliers’ Firm Valuation, Operating Performance, and Strategic Decisions ." Doctoral dissertation, Kent State University, 2018. http://rave.ohiolink.edu/etdc/view?acc_num=kent1576790987634493

    Chicago Manual of Style (17th edition)

kent1576790987634493
460
© 2018, all rights reserved.
This open access ETD is published by Kent State University and OhioLINK.