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’).

When does the manufacturing reshoring strategy create value?

Luciano Fratocchi;
2022

Abstract

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’).
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Utilizza questo identificativo per citare o creare un link a questo documento: http://hdl.handle.net/11697/186433
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