Mitigating the negative financial effects of extreme weather events through supply chain analytics

Yangchun Xiong; Runyue Han; Xiaoxuan Ma; Hugo Lam; Andrew Lyons

doi:10.1016/j.ijpe.2024.109441

Mitigating the negative financial effects of extreme weather events through supply chain analytics

Yangchun Xiong^*, Runyue Han, Xiaoxuan Ma, Hugo Lam, Andrew Lyons

^*Corresponding author for this work

The York Management School

Research output: Contribution to journal › Article › peer-review

Abstract

Despite extensive discussions on the value of integrating big data analytics into supply chains, or supply chain analytics (SCA) for short, it remains unclear whether SCA can effectively help firms mitigate the negative financial impacts of extreme weather events. To address this important research question, we first employed the event study methodology to quantify extreme weather events' financial effects in terms of abnormal stock returns. Then, we compared the difference in abnormal stock returns between firms that have adopted SCA and matched control firms without SCA adoption. Our event study results indicate that, although these events affected firms' stock returns negatively, the effects were less severe for firms with (rather than without) SCA adoption. Furthermore, firms having more stable innovation outputs reaped greater benefits from SCA in the extreme weather context. Conversely, firms facing more unstable market demands benefited more from SCA in the extreme weather context. Overall, our research demonstrates the mitigating role played by SCA during extreme weather events but also reveals how this mitigating role is contingent on the firm's internal and external operating uncertainties.

Original language	English
Article number	109441
Journal	International Journal of Production Economics
DOIs	https://doi.org/10.1016/j.ijpe.2024.109441
Publication status	Accepted/In press - Oct 2024

Bibliographical note

Publisher Copyright:
© 2024 Elsevier B.V.

Keywords

Abnormal stock returns
Big data
Event study
Extreme weather events
Supply chain analytics

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10.1016/j.ijpe.2024.109441

https://doi.org/10.1016/j.ijpe.2024.109441

Cite this

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title = "Mitigating the negative financial effects of extreme weather events through supply chain analytics",

abstract = "Despite extensive discussions on the value of integrating big data analytics into supply chains, or supply chain analytics (SCA) for short, it remains unclear whether SCA can effectively help firms mitigate the negative financial impacts of extreme weather events. To address this important research question, we first employed the event study methodology to quantify extreme weather events' financial effects in terms of abnormal stock returns. Then, we compared the difference in abnormal stock returns between firms that have adopted SCA and matched control firms without SCA adoption. Our event study results indicate that, although these events affected firms' stock returns negatively, the effects were less severe for firms with (rather than without) SCA adoption. Furthermore, firms having more stable innovation outputs reaped greater benefits from SCA in the extreme weather context. Conversely, firms facing more unstable market demands benefited more from SCA in the extreme weather context. Overall, our research demonstrates the mitigating role played by SCA during extreme weather events but also reveals how this mitigating role is contingent on the firm's internal and external operating uncertainties.",

keywords = "Abnormal stock returns, Big data, Event study, Extreme weather events, Supply chain analytics",

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language = "English",

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AU - Xiong, Yangchun

AU - Han, Runyue

AU - Ma, Xiaoxuan

AU - Lam, Hugo

AU - Lyons, Andrew

PY - 2024/10

Y1 - 2024/10

N2 - Despite extensive discussions on the value of integrating big data analytics into supply chains, or supply chain analytics (SCA) for short, it remains unclear whether SCA can effectively help firms mitigate the negative financial impacts of extreme weather events. To address this important research question, we first employed the event study methodology to quantify extreme weather events' financial effects in terms of abnormal stock returns. Then, we compared the difference in abnormal stock returns between firms that have adopted SCA and matched control firms without SCA adoption. Our event study results indicate that, although these events affected firms' stock returns negatively, the effects were less severe for firms with (rather than without) SCA adoption. Furthermore, firms having more stable innovation outputs reaped greater benefits from SCA in the extreme weather context. Conversely, firms facing more unstable market demands benefited more from SCA in the extreme weather context. Overall, our research demonstrates the mitigating role played by SCA during extreme weather events but also reveals how this mitigating role is contingent on the firm's internal and external operating uncertainties.

AB - Despite extensive discussions on the value of integrating big data analytics into supply chains, or supply chain analytics (SCA) for short, it remains unclear whether SCA can effectively help firms mitigate the negative financial impacts of extreme weather events. To address this important research question, we first employed the event study methodology to quantify extreme weather events' financial effects in terms of abnormal stock returns. Then, we compared the difference in abnormal stock returns between firms that have adopted SCA and matched control firms without SCA adoption. Our event study results indicate that, although these events affected firms' stock returns negatively, the effects were less severe for firms with (rather than without) SCA adoption. Furthermore, firms having more stable innovation outputs reaped greater benefits from SCA in the extreme weather context. Conversely, firms facing more unstable market demands benefited more from SCA in the extreme weather context. Overall, our research demonstrates the mitigating role played by SCA during extreme weather events but also reveals how this mitigating role is contingent on the firm's internal and external operating uncertainties.

KW - Abnormal stock returns

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Mitigating the negative financial effects of extreme weather events through supply chain analytics

Abstract

Bibliographical note

Keywords

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