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| Chain Transmission of Operational Budget Information and the Bullwhip Effect in Supply Chain:A Perspective Based on Information Spillover and Risk Autonomy |
| XU Nan, MAO Yihuan, LIU Hao
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School of Accountancy, Southwestern University of Finance and Economics;
School of International Business, Southwestern University of Finance and Economics;
Institute of Accounting and Finance,Shanghai University of Finance and Economics |
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Abstract This study investigates the impact of operational budget information (OBI) disclosed by firms on supply chain governance, a topic that has received limited empirical attention. Using a manually collected dataset of nearly 100 types of OBI disclosed by A-share listed firms in their financial reports from 2007 to 2020, for the first time, we focus on the transmission of supply chain on operation budget, examine how customers' OBI influences supply and demand fluctuations in upstream direct and multi-tier suppliers and the impact and mechanism of bullwhip effect of the whole supply chain. Our findings indicate that the disclosure of customers' OBI significantly reduces fluctuations in supply and demand for both direct suppliers and multi-tier suppliers. Moreover, this disclosure mitigates the bullwhip effect within the supply chain, thereby enhancing its self-risk management capabilities. Production-and market-related OBI, as well as indicators reflecting target achievement, exhibit stronger risk governance effects. Additionally, the risk governance effect is more pronounced for suppliers with lower integration levels and higher operational risks. Mechanism analysis reveals that the risk governance is achieved through reducing suppliers' deviations in operational planning, optimizing workforce allocation, and improving inventory management efficiency.
Our study makes several important theoretical contributions. First, we expand the research on the disclosure and utilization of operational information in supply chains. While existing literature primarily focuses on the transmission of private information or the impact of general financial data within the supply chain, this paper distinctly emphasizes the role of publicly disclosed, operationally specific information in supply chain governance.
Second, we innovatively extract and organize specific, quantifiable operational budget indicators disclosed by firms. Existing research on operational information is predominantly qualitative, concentrating on aspects such as whether forward-looking information is disclosed or the tone and length of such disclosures. However, there is limited investigation into the impact of specific numerical data provided by operational information on market participants. We analyze the role of these indicators, including budget metrics and performance, from multiple dimensions in mitigating supply chain fluctuations.
Third, we uncover the pathways and screening mechanisms through which OBI impacts the supply chain. By differentiating between various budget types and evaluating information quality, we provide empirical evidence and practical examples that demonstrate the value of quantitative management accounting information for supply chain participants.
Our study also has several important policy implications. First, from the perspective of managing accounting information, we propose solutions to enhance the resilience and stability of supply chains, as highlighted by the Central Economic Work Conference. Additionally, we offer insights into reducing structural imbalances between supply and demand in the real economy and improving the efficiency of information flow within supply chains.
Second, rather than focusing on high-cost tools for supply chain transformation, we emphasize the mechanisms and principles of autonomy within supply chains that rely on low-cost management information. Our findings demonstrate that OBI is a critical and cost-effective information source for enabling dynamic adjustments in supply chain governance, further enriching the literature on the spillover effects of management accounting information disclosure from a supply chain perspective.
Third, we assist regulatory authorities in more effectively regulating the disclosure of quantitative management accounting information within firms, identifying which types of information are most advantageous for supply chain risk governance. We provide guidance for regulators to improve information disclosure, implement “precise classification,” and support efforts to mitigate risks and prevent risk spillovers.
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Received: 11 June 2024
Published: 02 December 2024
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