25th IBSS Research Seminar | Cost Uncertainty, Supply Chain and Insider Trading

Organised by: RCE 3 (Decision Making in Business)

 Presentation Title: Cost Uncertainty, Supply Chain and Insider Trading

Time and Date: 3:00PM - 4:00PM, Thursday, 5 December 2024 (Beijing time)

Language: English

Onsite location: BS 574

Abstract:

We analyze the interplay between upstream and downstream production cost uncertainty (PCU) and managerial trading behavior. Our theoretic model depicts that given cost uncertainty, managers have incentives to manipulate production to maximize personal trading gains and the manipulative activities are transmitted through the supply chain via the input-output links. Our empirical findings confirm that higher PCU in supply chains increases both focal firms’ insider trading profitability and firm value. We employ instrumental variables (IV) analysis, leveraging industry-level merger and acquisition (M&A) intensity as an exogenous shock to customer and supplier uncertainties. Our study contributes to the understanding of how supply chain dynamics and managerial incentives interact through the lens of cost information.

Presenter: Dr. Hanwen Sun, University of Bath

Hanwen Sun is an Associate Professor of Finance at School of Management, University of Bath. Her research interests mainly lie in the areas of corporate finance and corporate governance, with a special focus on the topics of informed trading, product market competition, corporate innovation, and ESG issues. Her work has been published in a range of peer-reviewed FT50 and ABS 4*/4/3 journals, such as Research Policy, Journal of Corporate Finance, Journal of Empirical Finance and Journal of Accounting and Public Policy, among others. Her research has been featured by has been featured in the Promarket and Columbia Law School’s Blog. Her research project has been funded by the British Academy, as the principal investigator.