How Do Firms' Political Connections Affect Their Supply Chain Disclosure?

Abstract

The supply chain is an important lens through which to understand the business, operational and financial behavior of firms. This paper examines in detail its important impact on supply chain information disclosure through the lens of the presence or absence of political affiliation as an important characteristic of a firm. Based on a panel data of Chinese A-share listed companies, the empirical analysis finds that corporate political affiliation significantly increases the level of corporate supply chain disclosure, and this effect persists after a series of robustness tests. Heterogeneity analysis shows that the effect is more pronounced in the eastern and central regions than in the western region, and the effect is greater for firms in the central region, which are mainly present in capital-intensive industries compared to labor-intensive firms. Based on an upstream and downstream perspective, the impact is more pronounced upstream. Further mechanistic analysis reveals that the productivity-enabling effect of political linkages and the weakening of management power are important mechanistic pathways. This paper enriches the research on the influencing factors of corporate supply chain information disclosure and gives corresponding suggestions for enhancing corporate supply chain transparency.