We investigate how suppliers adjust their innovation activities when a customer is revealed involved in corporate fraud. We find that suppliers reduce R&D expenses after financial misconduct of the customer become known and generate fewer patents in comparison to a control group of firms that...

We examine how an industry leader's competitors respond when financial fraud by the leader is publicly revealed. We document evidence of predatory advertising and pricing. Close competitors of the leader step up advertisement spending relative to control firms. Although we do not directly...

We show that influential stakeholders can distort corporate policies when they cannot commit to a long-term relationship. Following the revelation of financial fraud by a major customer, suppliers surprisingly outperform a control group in terms of sales growth, Tobin’s Q and survival...