Reports
Discussion Papers
No.928 The Impact of Industrial Value Chain Characteristics on Firms’ Financial Performance: Insights from the US Stock Market
March 2026
ABSTRACT
This study explores the influence of industry-level value chain characteristics on firms’ financial performance, a subject that is frequently discussed yet rarely examined empirically. By correlating US input-output data across 405 sectors with financial information from listed companies in the US stock market, we discern a significant influence of value chain position, length, and complexity on firm financial performance, with a notable marginal effect at the industry level. Furthermore, we identify a U-shaped relation between value chain attributes and financial outcomes, aligning with the so-called “Smile Curve” phenomenon. This study offers new insights for investors aiming to make informed industry-specific investment decisions.
Keywords: Value chain, production network, financial performance, US stock market, ROE, ROA, Tobin’s Q
JEL classification: C58, D57, G17, L14
PDF available at https://hdl.handle.net/2344/0002001768
Please note that discussion papers are works in various stages of progress and most have not been edited and proofread and may contain errors of fact or judgment. Revised versions of these papers may subsequently appear in more formal publication series. The views expressed in this publication are those of the author(s). The IDE does not guarantee the accuracy of the data included and accepts no responsibility for any consequences arising from its use.