Customers’ capital market information quality and suppliers’ performance


Research output: Journal PublicationsJournal Article (refereed)peer-review

33 Citations (Scopus)


We empirically examine the association between downstream firms’, i.e., customers’ capital market information quality, and the operating performance of upstream firms, i.e., suppliers. Customers’ capital market information quality is measured by the customers’ provision of earnings forecasts, the customers’ reported earnings quality, and the customers’ coverage by financial analysts and credit rating agencies. We hypothesize and find a positive association between customers’ capital market information quality and suppliers’ operating performance measured by the DuPont profitability ratios. The association is stronger for suppliers with higher sales volatility, no order backlogs, customers who are less dependent on their input, and shorter business relation with customers. Collectively, the results suggest that the quality of information provided by the customers to the capital market has a spillover effect in the input market, i.e., helps the suppliers improve their performance.
Original languageEnglish
Pages (from-to)1690-1705
Number of pages16
JournalProduction and Operations Management
Issue number10
Early online date4 Feb 2014
Publication statusPublished - Oct 2014
Externally publishedYes

Bibliographical note

Zheng Wang acknowledges partial financial support for this research from research grants of City University of Hong Kong.


  • DuPont profitability ratios
  • analysts
  • credit rating
  • earnings guidance and quality
  • information sharing

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