Essays on Financial Disclosures and Supply Chain Relationships

Financial disclosures by related companies play multiple roles. They can function as an alternative information source about the firm to external parties. They can also serve as a mechanism for screening and monitoring of management by outsiders. This dissertation consists of two essays examining the role of financial disclosures in supply chain relationships.;The first essay investigates how incentives of major customers may affect the disclosures provided by their suppliers. In particular, I examine the disclosures that suppliers provide prior to major customers' seasoned equity offerings (SEOs). I find that suppliers provide voluntary disclosures that increase the stock price of the major customer in the six month period prior to an equity issue. This effect is stronger when the major customer has bargaining power over the supplier, the equity issue size is large, supplier disclosures are highly informative about the major customer, and customer firm's executives have large holdings of their company's stock. I further present evidence of lower turnover, but not increased sales, for suppliers who provide disclosures that contribute towards increasing the major customer's stock price. Finally, I examine whether major customers use suppliers' disclosures as a complement or substitute to their own disclosures prior to an SEO, but do not find conclusive evidence for either relation. Overall, the first essay provides evidence of how incentives of managers in one firm may influence the content of voluntary disclosures provided by another firm through a supply chain relationship.;The second essay examines the effect of accounting restatements on the costs of supply chain management. I find that when a firm issues an accounting restatement, supplier contracting terms in the form of trade credit and contract duration decline. Given these changes in supplier contracting terms, I provide evidence of a substitution between the use of supplier contracts and the use of derivatives. Overall, this essay provides evidence of greater costs for restatement firms in conducting business with their suppliers. This essay also suggests that financial reporting quality is associated with supplier contracting terms and methods for managing supply chain risk.