Supply Chain Network Centrality and Corporate Financial Risk: Evidence from Chinese Listed Firms

Abstract

This study investigates the relationship between supply chain network centrality and corporate financial risk using Chinese A-share non-financial listed firms from 2011 to 2023. Firms’ supply chain networks are constructed based on major supplier and customer relationships, and network positions are measured using degree, closeness, and betweenness centrality.

Empirical results show a significant inverted U-shaped relationship between network centrality and financial risk. As centrality increases, financial risk initially rises and then declines, with turning points differing across centrality measures. Robustness tests, including U-shape tests, alternative financial risk measures (O-score), and lagged explanatory variables, confirm the main findings.

The results highlight the importance of considering supply chain network structure when analyzing firm financial risk, offering new evidence on the nonlinear impact of network positions on corporate stability.