Browsing by Author "Markou, Panos"

Now showing 1 - 3 of 3
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    Automotive Procurement Under Opaque Prices: Theory with Evidence from the BMW Supply Chain
    (Informs, 2023-07-27) Turcic, Danko; Markou, Panos; Kouvelis, Panos; Corsten, Daniel; https://ror.org/02jjdwm75
    Several features of automotive procurement distinguish it from the prototypical supply chain in the academic literature: pass-through pricing that reimburses suppliers for raw material costs, market frictions that prohibit cost transparency and imbue suppliers with pricing power, and contractual commitments that span multiple production periods. In this context, we formalize a procurement model by considering an automaker that buys components from an upstream supplier to assemble cars over several production periods in an environment where period demands and raw material costs are both stochastic. Our paper clarifies how information asymmetry and market factors that amplify or weaken this asymmetry affect the firms’ procurement protocol preferences. Then, using proprietary contract and supplier data from BMW, we empirically validate this model and show that it reflects BMW’s reality: the factors that should theoretically go into automotive procurement decisions do so. Our analysis also reveals that existing contracting protocols in this context are not optimal for procurement under asymmetric information, and so we propose an alternative contracting method. We calibrate our model and estimate an automaker’s performance improvement from this optimal contract over the status quo.
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    Financial and Operational Risk Management: Inventory Effects in the Gold Mining Industry
    (Wiley, 2021-05-01) Markou, Panos; Corsten, Daniel; https://ror.org/02jjdwm75
    Financial and operational risk management are central concepts at the intersection of finance, operations, and commodity risk management. Yet, empirical evidence on their effects on inventory is lacking. We use a fine-grained data set comprising the financial and operational risk management decisions of gold miners from 2003 to 2011 to empirically assess the effects of risk management on inventory. Faced with volatile gold prices, miners may manage (output) risk financially by committing to sell future gold production and lock in prices. They may also manage (input) costs operationally by varying the quality of ore they extract and process, thereby altering the costs they incur and influencing inventory holdings. In addition to affecting profitability, we show that these two risk management strategies have implications for inventory holdings. We find that a one-standard deviation increase in financial risk management (FRM) is associated with an 14.3% decrease in inventory, as FRM decreases the option value of delaying processing inventory. On the other hand, a one-standard deviation increase in operational risk management (ORM) is associated with a 3.5% increase in inventory. We also find evidence that, in this context, FRM and ORM could be viewed as complements.
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    The Effect of Corporate Social Performance on the Financial Performance of Business-to-Business and Business-to-Consumer Firms
    (Wiley, 2019-03-27) Stamatogiannakis, Antonios; Luffarelli, Jonathan; Markou, Panos ; Gonçalves, Dilney; https://ror.org/02jjdwm75
    There exists a widespread managerial belief that higher corporate social performance (CSP) increases both firm value and sales. Although numerous studies provide evidence of a positive effect of CSP on firm value, whether CSP can impact sales remains largely unknown. Can CSP influence sales? Is this effect contingent on the product-market profile, that is, on whether firms operate in business or consumer markets? We use a panel dataset comprising 23,769 firm-year observations to help address these questions. We find that higher CSP has a strong negative effect on sales for business-toconsumer firms but an insignificant or economically trivial effect for business-to-business firms. However, we also find that higher CSP has a positive effect on firm value for both types of firms. Taken together, these results demonstrate that higher CSP results in higher firm value but can hurt sales. We discuss the theoretical contributions and managerial implications of these findings.