Management Seminar - Professor Morgan Swink
Seminar Room 10.039, Level 10 the SpotMap
PRESENTER: Professor Morgan Swink (Texas Christian University)
TOPIC: “Major Customers’ Power and Real Earnings Management: Stock Market Perceptions, Financial Performance Effects, and Implications for Suppliers”
This study offers a novel examination of supply chain power in the context of real earnings management (REM), instances in which executives execute (or forego) actual transactions for the sole purpose of meeting or beating earnings targets. We examine whether powerful major customers (MCs) in supply chains exploit their positions to engage in REM to a greater degree than less powerful firms. We also examine 1) whether the stock market reacts differently to MCs’ and non-MCs’ REM, 2) whether any difference exists between MCs’ and non-MCs’ post-REM financial performance, and 3) how suppliers are impacted by their MCs’ REM behavior. Results suggest that MCs exploit their supply chain power to engage in more REM. In contrast to the skeptical stock market reaction when other firms engage in REM, we find no evidence that MCs’ earnings are discounted when there is evidence of REM. Instead, the market appears to interpret MCs’ behavior as “legitimate” uses of power in supply chain management, rather than REM typically considered to be value-destroying. Further, we find that, in post-REM periods, MCs that engage in REM exhibit better operating cash flow performance than non-MCs who do so. These findings suggest that the consequential costs of REM are lower for MCs than for non-MCs. Finally, we report evidence that the particular form of MCs’ REM appears to determine the impact on their suppliers. Suppliers’ financial performance deteriorates when MCs’ REM entails discretionary expense cuts. However, suppliers’ financial performance benefits when MCs ramp up production to effect REM. These findings offer new insights into the benefits and uses of power in supply chain relationships, in a previously unexplored context. We discuss the implications of the findings for future research.
Morgan Swink is the Eunice and James L. West Chaired Professor of Supply Chain Management in the Neeley School of Business at Texas Christian University. He also serves as the Executive Director of the Center for Supply Chain Innovation at the Neeley School. He teaches in areas of supply chain management, project management, innovation management, and operations strategy. Dr. Swink’s current research projects address digital transformation and cutting edge competencies in supply chain management, financial impacts of supply chain management, collaborative integration, supply chain organizational structures, innovation initiatives and project success factors. He was recently ranked among the top ten innovation management scholars in the world, and among the top 75 most productive operations management scholars.
Dr. Swink is the former Co-Editor in Chief for the Journal of Operations Management, a top academic supply chain management journal. He serves as associate editor for several other journals. He has served as president of the Decision Sciences Institute, as well as chair of the Research Strategies Committee and a member of the board of directors for CSCMP. He has co-authored two supply chain operations text-books, one managerial book on supply chain excellence, and more than 75 articles in a variety of academic and managerial journals. He has won several research and teaching awards, including the 2016 Research and Creativity Award at TCU. Dr. Swink consults and leads executive workshops and seminars in supply chain management best practices, cross-organizational integration, project management, operational flexibility, and breakthrough thinking for innovation and productivity.
Past academic postings include Michigan State University (1998-2010) and Indiana University (1988-1998). Before becoming a professor, Dr. Swink worked for 10 years in manufacturing and product development positions at Texas Instruments Incorporated. He holds a BS in Mechanical Engineering from Southern Methodist University (83), an MBA from the University of Dallas (86), and a Ph.D. in Operations Management from Indiana University (92).
RSVPs are not necessary.