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Supply Chain Contract Coordination in Retailer Equity Buybacks
Xin Li1, Shimiao Xu1, Jie Deng2
1School of Finance, Chongqing Technology and Business University, Chongqing, China.
Evaluation Review
|August 14, 2026
Summary
Retailer share repurchases can improve market expansion but may harm supply chain coordination. Revenue-sharing contracts can align interests and mitigate negative effects, optimizing supply chain performance.
Area of Science:
- Supply Chain Management
- Corporate Finance
- Market Dynamics
Background:
- Retailer share repurchases are common financial strategies.
- Supply chain contract design significantly impacts market expansion and coordination.
- Agency conflicts and control premiums can arise from share repurchases.
Purpose of the Study:
- To investigate the interplay between retailer share repurchases and supply chain contract design in expanding markets.
- To analyze the impact of share repurchases on retailers' market development efforts and suppliers' pricing strategies.
- To compare wholesale price and revenue-sharing contracts in the context of retailer share repurchases.
Main Methods:
- Development of a supply chain contract model incorporating retailer share repurchases.
- Analysis of incentive-compatible mechanisms, market expansion, and control premium costs.
- Comparative evaluation of wholesale price and revenue-sharing contracts for risk-reward allocation and coordination.
Main Results:
- Share repurchases can mitigate agency conflicts and enhance market-expansion observability but may incur control premium costs and weaken coordination.
- Revenue-sharing contracts, when linked with share repurchases, can align diverse stakeholder interests (shareholders, private equity, suppliers).
- The supply chain value of share repurchases hinges on translating financial incentives into coordinated operational and pricing decisions.
Conclusions:
- Retailer repurchase decisions must align with market development and ordering strategies for supply chain benefits.
- Suppliers can leverage revenue-sharing contracts to balance pricing and revenue allocation.
- Private equity institutions should foster collaborative operations over excessive control through governance mechanisms.
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