Global supply chain pressure and stock price crash risk: evidence from China

Using an intertemporal predictive regression model, we find that global supply chain pressure, interpreted as increased transportation costs, prolonged delivery time, and manufacturers’ prospects in more backlog orders and inventory accumulations, can forecast an increase in the risk of stock price crashes for Chinese firms. A firm with state ownership or more concentrated suppliers has a cushioning effect of global supply chain pressure on stock crash risk. However, firms further reinforce their stock crash risk under supply chain pressure if these firms are monopolists or have more intensive international operations and higher share turnover. These findings highlight the importance of global supply chain resilience in mitigating future extreme downside risks in Chinese stock prices.