SUPPLY CHAIN DYNAMICS AFTER THE COVID-19 PANDEMIC AND STOCK MARKET PERFORMANCE: EVIDENCE FROM THE

Abstract

Supply chain risk is a strategic issue for managing multinational companies,
and Covid-19 has shown the relevance of this type of risk for the firm's survival
probability. The market may perceive the choice of replacing some of the main
customers or suppliers as an increase or a decrease of the risk based on the features
of the new supply chain members, and markets tend to penalize companies that
increase their exposure to unaffordable events. During the pandemic, many
supply chains suffered from glitches and companies were obliged to redefine
their network by selecting their new strategic customers and/or suppliers.
The paper evaluates the supply chain composition strategies of a set of
multinational companies based in the US during the last decade. It highlights
the differences in supply chain management behavior before and during
the pandemic. Data collected allow testing the impact on the stock market
performance of modifying the supply chain network by adding new members
that may have a different level of risk. Results show that the market reaction to
supply chain updates changed after the Covid-19, and nowadays there is greater
attention on the credit risk of the new companies entering the supply chain.