The Effect of Demand-Supply Mismatches on Equity Volatility
An Analysis of Different Types of Supply Chain Risks
Kevin B. Hendricks, Vinod R. Singhal*
Published
on Jul 1, 2007
This paper documents the effect of demand-supply mismatches on long-run equity volatility by
examining the volatility changes associated with three different types of supply chain risks: production
disruptions, excess inventory, and product introduction delays. The results are based on a sample of
nearly 2400 demand-supply mismatches announced by publicly traded firms. All types of demand-supply
mismatches result in volatility increases.
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