Implications of limited investor attention to customer–supplier information transfers
نویسنده
چکیده
This study focuses on the market reaction to information transfers from economically linked customers. I examine whether investors have limited attention with respect to the information contained in customer earnings announcements for suppliers. Using 1083 unique customer–supplier relationships for the period 1983–2011, I find that the cumulative abnormal returns of a supplier surrounding and following linked customers’ earnings announcements are positively related to the earnings information of the customers, suggesting that customer earnings announcements convey information to suppliers. I also find that the post-earnings announcement drift in customers contributes to the cross-firm reaction, and the predictability of customer earnings surprises for suppliers’ future returns is not entirely due to limited investor attention. © 2014 The Board of Trustees of the University of Illinois. Published by Elsevier B.V. All rights reserved.
منابع مشابه
Implications of Limited Investor Attention to Economic Links
This study focuses on the market reaction to information transfers from economically linked customers. In particular, I examine whether investors have limited attention with respect to the information contained in customer earnings announcements for suppliers. Using 1,083 unique customer-supplier relationships for the period 1983–2011, I find that the cumulative abnormal returns of a supplier s...
متن کاملInformation Externalities in Capital Markets: The Economic Determinants of Suppliers’ Stock Price Reaction to Their Major Customers’ Information Events
In a commentary on information transfer research, Schipper (1990) notes that when compared to whether information transfers exist or not, “so far little attention has been given to explaining how such transfers operate.” In this study we develop and test hypotheses about the economic determinants of information externalities suppliers experience at the time of their major customers’ information...
متن کاملTRANSFORMING A BACK - A T F G tiv re of hu B pr tio of 1 J OFFICE FUNCTION : LESSONS FROM BAE SYSTEMS ' EXPERIENCE WITH AN ENTERPRISE PARTNERSHIP 1
Historically, senior executives have taken four approaches to transformation: do-ityourself, management consultants, fee-for-service outsourcing, and even the occasional joint venture. While these approaches remain viable for various contexts, a new one has emerged that warrants attention: the enterprise partnership, where a customer and supplier create a jointly owned enterprise that both serv...
متن کاملComplexity associated with supplier-customer integration
This paper presents the findings of a study with a Unilever bottle-filling plant and its key bottle supplier, ALPLA. The purpose of this paper is to investigate the complexity associated with before and after integration. The nature of the complexity alters as the supplier-customer relationship changes, in this case from pre-integration to post-integration system. The areas in which complexity ...
متن کاملInvestor attention, overconfidence and category learning
Motivated by psychological evidence that attention is a scarce cognitive resource, we model investors’ attention allocation in learning and study the effects of this on asset-price dynamics. We show that limited investor attention leads to category-learning behavior, i.e., investors tend to process more market and sector-wide information than firm-specific information. This endogenous structure...
متن کامل