Shareholder Value Implications of Supply Chain ESG Performance : Evidence From Negative Incidents

This paper examines the long-term value implications of supply chain ESG performance. We find that firms with fewer supply chain ESG incidents exhibit higher future stock returns and accounting performance. We also find that robust supply chain ESG creates value by (i) enhancing supply chain stability, (ii) attracting pro-social stakeholders, and (iii) hedging regulatory risk. Further, we find evidence that the signal about supply chain ESG is initially mispriced due to the lack of supply chain disclosure and high information acquisition costs. Overall, we highlight the net benefits of robust supply chain ESG performance and inform regulators and investors about the implications of relevant disclosure