Loading…
When does the manufacturing reshoring strategy create value?
Reshoring has gained a lot of attention recently by academics and practitioners alike, and is promising to become even more relevant in the aftermath of the COVID-19 pandemic. Building on earlier research on the effects of reshoring announcements on the short-term market value of the firm, this work...
Saved in:
| Main Authors: | , , , , |
|---|---|
| Format: | Default Article |
| Published: |
2022
|
| Subjects: | |
| Online Access: | https://hdl.handle.net/2134/20457219.v1 |
| Tags: |
Add Tag
No Tags, Be the first to tag this record!
|
| Summary: | Reshoring has gained a lot of attention recently by academics and practitioners alike, and is promising to become even more relevant in the aftermath of the COVID-19 pandemic. Building on earlier research on the effects of reshoring announcements on the short-term market value of the firm, this work employs an event-study methodology and aims to understand under which circumstances the market perceives reshoring as potentially more (or less) value-creating. The analysis of a sample of 64 reshoring instances from 2005 to 2019, announced by 54 firms from eight developed economies, suggests that investors are more confident in the firm's future cash-flow potential when: a) it invests in productive activities at home, instead of overseas, i.e. ‘kept-from-offshoring’ (as opposed to actual relocations of activities, i.e. ‘back-reshoring’); b) the reshoring instance is communicated as a ‘plan’ (rather than a fixed ‘decision’); c) no state- or government-induced financial incentives are involved; d) the motivations are primarily ‘cost-efficiency seeking’ (rather than ‘customer perceived value seeking’). |
|---|