“Celebrating the 45th Anniversary of the University of Macau”
Information Externalities of Corporate Earnings Disclosures: Evidence from SME Procurement Decisions
Prof. Kevin TSENG
Professor, Chinese University of Hong Kong
Date: 27 April 2026 (Monday)
Time: 9:00-12:30
Venue: E22-G013
Host: Prof. Rubin HAO, Assistant Professor in Accounting
Abstract
We examine whether and how small and medium-sized enterprises (SMEs) adjust their operational decisions in response to the earnings information disclosed by nearby public firms. Using highly granular transaction-level data from value-added tax (VAT) invoices issued by Chinese SMEs, we conduct a short-window event study around mandatory corporate earnings-forecast disclosure. We find that SMEs significantly increase procurement following positive earnings surprises, consistent with earnings news serving as a forward-looking demand signal. The effect is strongest when the news receives greater media or analyst attention, when SMEs operate in the same industry as the disclosing firm, and when SMEs are newly established, employ financial specialists or have younger CEOs—settings that enhance information acquisition and processing. Furthermore, the observed adjustments in SMEs procurement are concentrated in production-related core materials, underscoring the operational relevance of earnings signals. We also find that SMEs’ procurement adjustments translate into subsequent sales growth, but that they fail to identify opportunistic earnings boosting, reacting even to inflated forecasts. Our evidence suggests that public firm disclosures generate economically meaningful information externalities that shape real decisions beyond capital markets, extending the scope of financial reporting’s real effects to the millions of private firms that underpin local economies.
Speaker
Kevin Tseng is a Professor at the Chinese University of Hong Kong (CUHK) Business School and Director of the newly established Faculty Development Centre. Professor Tseng’s research explores how access to innovation and information interact to shape economic behavior and market dynamics. His research spans knowledge spillovers, asset pricing, disclosure, innovation economics, behavioral economics, corporate finance, and household finance. His articles have appeared in leading scholarly journals, including The Journal of Finance, the Journal of Accounting and Economics, Review of Financial Studies, The Accounting Review, Management Science, the Journal of Financial and Quantitative Analysis, and Contemporary Accounting Research. He currently serves as Editor of the Journal of Contemporary Accounting & Economics, Associate Editor of Accounting and Business Research and the Asia-Pacific Journal of Accounting & Economics, and a member of the Executive Board of the Asian Innovation and Entrepreneurship Association (AIEA).
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