Risk pooling, supply chain hierarchy, and analysts’ forecasts
Production and Operations Management
Advance online publication
Wiley-Blackwell Publishing, Inc.
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.
Professor Hu is grateful for the ﬁnancial support from the National Natural Science Foundation of China (grant number: 71772150) and Young Talent Recruiting Plans of Xi’an Jiaotong University (grant number GL1J009).
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Hu, N., Ke, J.-Y.(F.), Liu, L., & Zhang, Y. (2018). Risk pooling, supply chain hierarchy, and analysts’ forecasts. Production and Operations Management. Advance online publication. doi: 10.1111/poms.12904