Who is this research for? Supply chain leaders, chief operating officers, chief financial officers, and anyone responsible for communicating business performance during periods of operational uncertainty.
Top Answer
Supply chain risks are often unavoidable, but what companies disclose about those challenges may influence how investors respond. This research suggests that firms discussing higher levels of supply chain risk during earnings calls generally experienced more negative stock market reactions. However, companies that also described meaningful efforts to address or reduce those risks appeared to lessen those negative effects. The findings indicate that investors value transparency paired with credible action.
Executive Summary
From geopolitical tensions to supplier shortages, supply chain uncertainty has become a recurring challenge for business leaders. New research from Dr. Christian Hofer (Department of Supply Chain Management, Sam M. Walton College of Business), Keno Theile and Kai Hoberg (Kuehne Logistics University), and Vinod R. Singhal (Georgia Institute of Technology) examines how companies communicate these challenges and how investors respond.
The researchers analyzed nearly 130,000 quarterly earnings call transcripts from publicly traded U.S. companies between 2008 and 2019. Using natural language processing, they identified discussions of supply chain risks as well as conversations describing actions companies were taking to reduce or resolve those risks.
The findings suggest that the way leaders discuss operational uncertainty may shape how investors interpret a company's future performance. Companies that discussed greater supply chain risk generally experienced more negative stock market reactions around their earnings calls. However, organizations that also described concrete efforts to manage or reduce those risks appeared to moderate some of those negative reactions.
In addition, the researchers found evidence that the value of discussing mitigation efforts depended in part on credibility. Particularly among larger firms, when statements about resolving supply chain risks appeared to be more rhetorical than substantive, the positive market response diminished.
Expert Insights: What should leaders know about communicating supply chain risk?
How can executives communicate supply chain challenges without undermining investor confidence?
Dr. Christian Hofer notes: "The takeaway from our research is not that executives should talk less about supply chain risk. Investors appear to value knowing not only what the problem is, but also what the company is doing about it. Acknowledging the challenge and explaining the response is much more useful than discussing the risk in isolation."
→ Takeaway: Pair transparency about supply chain risks with a clear explanation of how the company is responding.
How should companies decide which supply chain risks deserve public discussion—and which are better managed internally?
Dr. Christian Hofer adds: "Our study does not establish a precise threshold for which risks belong on an earnings call, but it does caution against interpreting a negative market reaction to risk as a reason to say less. Risks that could meaningfully affect the company’s operations or financial outlook should be addressed directly, while routine issues should be kept in proportion to their likely business consequences."
→ Takeaway: Focus public communication on supply chain risks that could meaningfully affect operations or financial performance.
How should companies balance transparency with reassurance during earnings calls?
Dr. Christian Hofer explains: "Transparency and reassurance are not opposites. Executives can be candid about a supply chain problem while also explaining the actions being taken to address it. Reassurance is more credible when it is grounded in substantive action rather than rhetoric."
→ Takeaway: Make reassurance credible by connecting it to substantive actions the company is taking to address the risk.
What impact does this research have on the way business leaders think about supply chain challenges?
Dr. Christian Hofer notes: "Supply chain risk is not only an operational issue; the market values this information. Our findings show that investors respond both to the risks companies face and to what management says it is doing to address them, which makes supply chain risk management relevant well beyond the operations function."
→ Takeaway: Treat supply chain risk as an enterprise-level issue that can influence both operational performance and investor response.
Link to the Original Research
Published in Production and Operations Management (2026)
Frequently Asked Questions
Can talking about supply chain risks actually strengthen investor confidence?
This study found that greater discussion of supply chain risks was generally associated with more negative market reactions. However, companies that also described credible efforts to manage or reduce those risks appeared to experience smaller negative reactions. The findings suggest that communication is most effective when it combines transparency about operational challenges with evidence that leadership is actively addressing them.
Why do investors pay close attention to supply chain discussions during earnings calls?
Supply chains influence a company's ability to manufacture products, fulfill customer demand, control costs, and generate future revenue. When executives discuss supplier shortages, transportation delays, inventory constraints, or other operational challenges, investors gain new information about risks that could affect future business performance. Earnings calls also allow analysts to ask follow-up questions, giving investors additional insight into how leadership understands and responds to those challenges.
What is supply chain risk resolution?
Supply chain risk resolution refers to the actions organizations take to prevent, reduce, or recover from supply chain disruptions. These efforts can include diversifying suppliers, increasing inventory buffers, redesigning logistics networks, improving collaboration with supply chain partners, or investing in operational flexibility. In this study, researchers examined whether companies discussed these types of mitigation efforts during earnings calls. Their findings suggest that investors appear to respond more favorably when companies describe credible actions to address supply chain challenges rather than simply acknowledging the risks themselves.
Why does this research matter beyond earnings calls?
Companies today communicate with many stakeholders, including employees, customers, suppliers, regulators, and investors, all of whom expect greater transparency during periods of uncertainty. The research suggests that credibility is built not only through acknowledging risks but also through demonstrating thoughtful action.
