Risk Pooling, Supply Chain Hierarchy, and Analysts' Forecasts

Nan HU*, Jian Yu Fisher KE, Ling LIU, Yue ZHANG

*Corresponding author for this work

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

1 Scopus Citations

Abstract

We investigate whether a firm's risk pooling affects its analysts' forecasts, specifically in terms of forecast accuracy and their use of public vs. private information, and how risk pooling interacts with a firm's position in the supply chain to affect analysts' forecasts. We use a social network analysis method to operationalize risk pooling and supply chain hierarchy, and find that risk pooling significantly reduces analysts' forecast errors and increases (decreases) their use of public (private) information. We also find that the positive (negative) relationships between risk pooling and analyst forecast accuracy and analysts' use of public (private) information are more pronounced upstream than downstream in a supply chain.

Original languageEnglish
Pages (from-to)276-291
Number of pages16
JournalProduction and Operations Management
Volume28
Issue number2
Early online date6 Jun 2018
DOIs
Publication statusPublished - Feb 2019

Fingerprint

Supply chains
Electric network analysis
Risk pooling
Analysts' forecasts
Supply chain
Private information
Forecast accuracy
Public-private

Bibliographical note

Professor Hu is grateful for the financial support from the National Natural Science Foundation of China (grant number: 71772150) and Young Talent Recruiting Plans of Xi’an Jiaotong University (grant number GL1J009).

Keywords

  • Analyst forecast accuracy
  • Public vs. private information
  • Risk pooling
  • Supply chain hierarchy
  • Systematic risk

Cite this

HU, Nan ; KE, Jian Yu Fisher ; LIU, Ling ; ZHANG, Yue. / Risk Pooling, Supply Chain Hierarchy, and Analysts' Forecasts. In: Production and Operations Management. 2019 ; Vol. 28, No. 2. pp. 276-291.
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Risk Pooling, Supply Chain Hierarchy, and Analysts' Forecasts. / HU, Nan; KE, Jian Yu Fisher; LIU, Ling; ZHANG, Yue.

In: Production and Operations Management, Vol. 28, No. 2, 02.2019, p. 276-291.

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

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AU - HU, Nan

AU - KE, Jian Yu Fisher

AU - LIU, Ling

AU - ZHANG, Yue

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N2 - We investigate whether a firm's risk pooling affects its analysts' forecasts, specifically in terms of forecast accuracy and their use of public vs. private information, and how risk pooling interacts with a firm's position in the supply chain to affect analysts' forecasts. We use a social network analysis method to operationalize risk pooling and supply chain hierarchy, and find that risk pooling significantly reduces analysts' forecast errors and increases (decreases) their use of public (private) information. We also find that the positive (negative) relationships between risk pooling and analyst forecast accuracy and analysts' use of public (private) information are more pronounced upstream than downstream in a supply chain.

AB - We investigate whether a firm's risk pooling affects its analysts' forecasts, specifically in terms of forecast accuracy and their use of public vs. private information, and how risk pooling interacts with a firm's position in the supply chain to affect analysts' forecasts. We use a social network analysis method to operationalize risk pooling and supply chain hierarchy, and find that risk pooling significantly reduces analysts' forecast errors and increases (decreases) their use of public (private) information. We also find that the positive (negative) relationships between risk pooling and analyst forecast accuracy and analysts' use of public (private) information are more pronounced upstream than downstream in a supply chain.

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