TY - JOUR AU - Ullrich, Kristoph AU - Transchel, Sandra T1 - Demand-Supply Mismatches and Stock Market Performance: A Retailing Perspective JF - Production and Operations Management SP - 1444 EP - 1462 IS - 8 VL - 26 PY - 2017 AB - We provide empirical evidence that the volatility of inventory productivity relative to the volatility of demand is a predictor of future stock returns in a sample of publicly listed U.S. retailers over the period 1985–2013. This key performance indicator, entitled demand–supply mismatch (DSM), captures the fact that low variation in inventory productivity relative to variation in demand is indicative of the superior synchronization of demand- and supply-side operations. Applying the Fama and French (1993) three-factor model augmented with a momentum factor (Carhart 1997), we find that zero-cost portfolios formed by buying the two lowest and selling the two highest quintiles of DSM stocks yield abnormal stock returns of up to 1.13%. These strong market anomalies related to DSM are observed over the entire sample period and persist after controlling for alternative inventory productivity measures and firm characteristics that are known to predict future stock returns. Further, we reveal that DSM is indicative of lower future earnings and lower sales growth and provide evidence that the observed market inefficiency results from investors’ failure to incorporate all of the information that inventory contains into the pricing of stocks. DO - 10.1111/poms.12687 M4 - Citavi ER -