Abstract
AbstractOpen‐book accounting is a practice to disclose the full cost structure of suppliers to customers to achieve cost efficiency in supply chains. However, the dominant market power of customers could interfere with this goal in practice. Using unique data on the suppliers of large Korean business groups, we find that open‐book accounting is associated with profit rate regulation by customers. Suppliers' price growth is capped despite the increase in supplied goods. Profit rates of suppliers significantly co‐move in times of low average profitability. Using an exogenous regulatory reform that outlawed coercive open‐book accounting, we find the tendencies significantly reversed post‐reform.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
