As first author, Associate Professor PENG Jie of the Advanced Institute of Business of Tongji University worked with her team on the paper entitled “Financial Statement Comparability and Global Supply Chain Relations”, which was accepted and published by the Journal of International Business Studies, a top-tier journal in the field of international business.

Global supply chains play a vital role in the modern economy, but their fragility is also a reminder of the importance of having a deep understanding of the factors that facilitate the establishment of global supply chain relationships. Building supply chain relationships involves coordination and information exchange at multiple levels, where financial transparency and comparability of information are critical. This paper discusses the impact of financial statement comparability on the establishment of global supply chain relationships, particularly supply chain relationships between multinational companies, and provides useful insights into how companies can improve their international competitiveness through financial transparency.

Core content of the paper:

Based on a large number of supply chain relationship data from 49 economies from 2003 to 2020, this paper analyzes the impact of financial statement comparability on the establishment of transnational supply chain relationships. The study found that when a firm’s financial statements are more comparable to those of its counterparts in the corresponding economy, the firm is more likely to establish and maintain more supply chain relationships with its counterparts in the corresponding economy. This shows that comparability of financial statements plays a positive role in eliminating information asymmetry, reducing transaction costs, and enhancing trust and willingness to cooperate. Especially in the context of globalization, there are significant information barriers between enterprises in different countries due to differences in system, culture, language, etc., and the improvement of financial statements comparability can effectively bridge these information gaps and promote cooperation and contact between enterprises. In order to address the endogeneity problem, this paper introduces two main exogenous changes to validate the robustness of research findings, namely the adoption of International Financial Reporting Standards (IFRS) and the international inspection by the U.S. Public Company Accounting Oversight Board (PCAOB). In addition, the study also found that when the information barriers between economies are high, the comparability of financial statements has a more significant impact on cross-border supply chain relations．

To sum up, this paper provides new insights into the establishment of cross-border supply chain relationships and further reveals the important role of financial statement comparability in promoting international trade. By increasing the transparency and comparability of financial statements, companies can not only reduce information asymmetries in cross-border cooperation, but also increase their participation and voice in global supply chains, thereby gaining more competitive advantages in an increasingly complex and uncertain global economic environment.

Research experience sharing:

My research focuses on the intersection of global supply chain management and financial transparency, with a particular emphasis on the role of financial statement comparability in multinational cooperation. As an example, this paper focuses on how financial statement comparability affects the formation of cross-border supply chain relationships. During the study, we spent a great deal of time collecting supply chain data for 49 economies from 2003 to 2020 and integrating relevant financial reporting data to provide a solid data base for the study. By overcoming the challenges posed by differences in international accounting standards, we have validated the critical role of financial transparency in supply chain relationships across multiple countries and regions. The study found that comparability of financial statements significantly enhances cross-border collaboration between firms, especially when trading with countries with high information barriers. Our findings have important implications for firms seeking to integrate into global supply chain systems, suggesting that greater financial transparency is an effective way to enhance international competitiveness and build global partnerships.

Faculty Profile

PENG Jie

Associate Professor of Advanced Institute of Business of Tongji University, Ph.D. from Department of Decision Sciences and Managerial Economics, Chinese University of Hong Kong. She focuses on the empirical research of operations management, mainly using large enterprise data, theoretical modelling and empirical research methods to deeply analyse the business model of enterprises and focus on solving practical enterprise problems. In recent years, she has published two papers in Production and Operations Management and Journal of International Business Studies, two top international journals.

Research areas: Supply chain and finance interaction, global supply chain restructuring, supply chain risk, etc.