Suppliers’ annual report tone and enterprise inventory efficiency

ABSTRACT

Using the data from disclosed information on the top 5 suppliers and annual report tone by Chinese A-share listed firms, this article examines the impact of supplier’s annual report tone on enterprise inventory efficiency. We find that the more positive the tone of the supplier’s annual report, the more efficient the company’s inventory. That is, the more positive the tone of the supplier’s annual report, the less inventory the enterprise holds and the shorter the inventory holding time. It shows that the tone of suppliers’ annual reports has a positive spillover effect on the efficiency of firms’ inventory. Our results still hold after a battery of additional tests.

KEYWORDS:

• Supplier’s annual report tone
• inventory efficiency
• textual analysis
• supply chain
• spillover effect

JEL CLASSIFICATION:

• D21
• G30
• M41

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

This work was supported by the Key Project of National Social Science Foundation of China under Grant No. 20AGL016.