The Impact of upstreamness on investment quality in multi-tier supply chains

Jengfang Chen, John Daniel Eshleman, Sungsoo Kim

Research output: Contribution to journalArticlepeer-review

Abstract

In this study, we explore the negative impact of upstreamness on suppliers’ investment quality and management earnings’ forecast accuracy and investigate whether a shared auditor engaged by both a supplier and its major customers could mitigate these effects. Using a comprehensive dataset of multitier supply chains, we find that suppliers located further upstream tend to have lower investment efficiency and exhibit less accurate management earnings forecasts. However, our results also show that the presence of a shared auditor in the supplier-customer pair could alleviate these adverse impacts by enhancing the quality of information in the supply chain. Our findings shed light on the implications of upstreamness in the supply chain, such as reduced investment efficiency and increased management forecast errors and suggest a role for information quality in mitigating these consequences.
Original languageEnglish
Pages (from-to)31-46
Number of pages16
JournalJournal of Management Accounting Research
Volume36
Issue number2
Early online date20 Feb 2024
DOIs
Publication statusPublished - 1 Jul 2024

Keywords

  • upstreamness
  • investment quality
  • management earnings’ forecast
  • shared auditors
  • information quality

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