Supply chain list disclosure and stock price crash risk – the role of industry competition and abnormal related-party transactions

Abstract

This study looks at how competition in an industry and unusual deals between related parties affect the release of supply chain lists and the risk of a stock price crash. Adding to earlier research that showed a link between supply chain list disclosure and stock price crash risk (SPCR), this study looks at how competition in the industry affects this relationship and how strange transactions involving related parties affect it. A quantitative approach is adopted, with OLS regression performed on a sample of 20,301 firm-year observations of Chinese non-financial listed companies from 2012 to 2022. The findings indicate that industry competition weakens the negative relationship between list disclosure and SPCR. More robust evidence reveals that supply chain list disclosure effectively reduces SPCR only in firms operating in low-competition industries. The results suggest that disclosing supply chain lists may undermine the competitive advantage of enterprises and further intensify the industry competition due to the high proprietary costs, particularly in highly competitive sectors. The mechanism test also shows that making the supply chain lists public lowers the number of strange related-party transactions, which lowers SPCR. Finally, our findings remain robust after conducting a series of robustness checks. This research offers valuable insights for corporate managers in selecting disclosure strategies, informs policymakers on enhancing disclosure regulations, and serves as a reference for investors concerned about SPCR.