Risk pooling, supply chain hierarchy, and analysts' forecasts

Author

Nan HU, Singapore Management UniversityFollow
Jian-Yu KE
Ling LIU
Yue ZHANG

Publication Type

Journal Article

Version

acceptedVersion

Publication Date

2-2019

Abstract

We investigate whether a firm's risk pooling affects its analysts' forecasts, specifically in terms of forecast accuracy and their use of public vs. private information, and how risk pooling interacts with a firm's position in the supply chain to affect analysts' forecasts. We use a social network analysis method to operationalize risk pooling and supply chain hierarchy, and find that risk pooling significantly reduces analysts' forecast errors and increases (decreases) their use of public (private) information. We also find that the positive (negative) relationships between risk pooling and analyst forecast accuracy and analysts' use of public (private) information are more pronounced upstream than downstream in a supply chain.

Keywords

risk pooling, supply chain hierarchy, analyst forecast accuracy, public vs. private information, systematic risk

Discipline

Databases and Information Systems | Finance and Financial Management | Operations and Supply Chain Management

Research Areas

Information Systems and Management

Publication

Production and Operations Management

Volume

28

Issue

2

First Page

276

Last Page

291

ISSN

1059-1478

Identifier

10.1111/poms.12904

Publisher

Wiley

Citation

HU, Nan; KE, Jian-Yu; LIU, Ling; and ZHANG, Yue. Risk pooling, supply chain hierarchy, and analysts' forecasts. (2019). Production and Operations Management. 28, (2), 276-291.
Available at: https://ink.library.smu.edu.sg/sis_research/8011

Copyright Owner and License

Authors

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.

Additional URL

https://doi.org/10.1111/poms.12904