We investigate the relationship between customer and supplier firms’ abnormal accruals to examine whether the supply chain is an important transmission channel of abnormal accruals. We propose “earnings management” hypothesis and “customer demand shock” hypothesis. Empirically, we examine the relation between a supplier’s estimated abnormal accruals and those of its major customers using Compustat Business Segment Files over the period 1987–2015. To further explore the demand shock channel, we directly test the impact of the bullwhip effect (BWE) on the linkage in abnormal accruals along the supply chain. Following the literature in operation management, we construct the amplification ratio, measured as the coefficient of variation of a firm’s orders divided by the coefficient of variation of the firm’s demand. We find that customer firms’ demand shocks link customer and supplier abnormal accruals as they propagate along the supply chain, via the BWE. Our evidence supports “customer demand shock” hypothesis. Consistent with the view that improving predictions on orders from their customers would mitigate this BWE, we find that a customer’s abnormal accruals have a much smaller impact on those of its suppliers whose auditors have expertise in the customer’s industries. Overall, our results suggest that the supply chain is an important transmission channel of abnormal accruals, and auditor expertise serves to reduce information opaqueness during this process. Our paper contributes to the literature examining the impact of BWEs on firms’ financial performance and the role of auditors’ expertise in reducing information opaqueness in supply chain.

中文翻译：

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客户-供应商关系和异常应计

我们通过调查客户和供应商企业异常应计之间的关系来检验供应链是否是异常应计的重要传递渠道。我们提出“盈余管理”假说和“客户需求冲击”假说。根据经验，我们使用 Compustat 业务部门文件在 1987 年至 2015 年期间检查供应商的估计异常应计与其主要客户的应计之间的关系。为了进一步探索需求冲击通道，我们直接检验了牛鞭效应（BWE）对供应链异常应计联动的影响。根据运营管理方面的文献，我们构建了放大率，用公司订单的变异系数除以公司需求的变异系数来衡量。我们发现，客户公司的需求冲击通过 BWE 将客户和供应商的异常应计项目沿供应链传播。我们的证据支持“客户需求冲击”假设。与改进对客户订单的预测将减轻这种 BWE 的观点一致，我们发现客户的异常应计对其审计师在客户行业具有专业知识的供应商的影响要小得多。总体而言，我们的研究结果表明，供应链是异常应计的重要传输渠道，审计师的专业知识有助于减少此过程中的信息不透明性。我们的论文有助于研究 BWE 对公司财务业绩的影响以及审计师的专业知识在减少供应链信息不透明性方面的作用的文献。