COVID-19, Supply Chain Breakdowns, and Firm Value

By exploiting the lockdown of Wuhan on January 23, 2020, during the COVID-19 pandemic and the disclosure of public firms' top five suppliers, we examine the impact of a supply chain disruption on stock returns. Our findings suggest that firms with major suppliers in Wuhan experience significantly worse cumulative abnormal returns than those whose suppliers are not located in Wuhan. The results are robust to alternative estimation methods, event windows, and supply chain disruption metrics. Our findings suggest that supply chain disruption contributes to negative stock returns and highlight the importance of supply chain disruption on firm value.

Automated summary

By analyzing the lockdown of Wuhan during the COVID-19 pandemic and the disclosure of public firms' top five suppliers, this study investigates the impact of supply chain disruption on stock returns. The findings reveal that firms with major suppliers in Wuhan experience significantly worse cumulative abnormal returns compared to those without suppliers in Wuhan. These results are confirmed through alternative estimation methods, event windows, and supply chain disruption metrics. Therefore, this study emphasizes the importance of supply chain disruption on firm value through its contribution to negative stock returns.