I already wrote about different effect supply chain disruptions can have on a focal company and its stakeholders. Now I found another interesting article dealing with the impact of different disasters on different industries within the supply chain.
The authors (Altay and Ramirez) use a exploratory empirical study to analyze the effect of over 3’500 historic natural disasters within over 150’000 firm-years. From the literature analysis three hypothesis were generated:
H1: A firm’s financial leverage increases in response to a disaster.
H2: A firm’s TAT (Total Asset Turnover) will decrease in response to a disaster.
H3: A firmâ€™s OCF (Operating Cash Flow) will increase in response to a disaster.
Two disaster databases were used to gather the relevant data about the disruptions. Three proxies for the overall effect of the disaster are used: ratio of damage over GDP, affected people by the disaster (per capita) and a composite measure based on the disaster count, affected population, the death toll and the damage. These were then correlated with the financial leverage, the TAT and the OCF.