Managing crash risks through supply chain transparency : evidence from China

Using data on Chinese non-fnancial listed frms covering 2009 to 2022, we explore the efect of supply chain transparency on stock price crash risk. Two proxies for sup‑ ply chain transparency are constructed using the number of supply chain partners' names and the proportion of their transactions disclosed in annual reports. The results reveal that enhancing supply chain transparency can decrease crash risk, specifcally by mitigating tax avoidance and earnings management. Moreover, the analysis sug‑ gests that this risk-reduction efect is more prominent in companies where managers are more incentivized to hide negative information and investors possess superior abilities to acquire information. Interestingly, supplier transparency is more infuential in mitigating crash risk than customer transparency. These fndings emphasize the sig‑ nifcance of supply chain transparency in managing fnancial risk.