 Do geographically nearby major customers mitigate suppliers’ stock price crash risk?Feng Cao, Xueyan Zhang and Rongli Yuan The British Accounting Review, 2022, vol. 54, issue 6 Abstract: This study examines the impact of geographically nearby major customers on suppliers' stock price crash risk. Using a sample of Chinese A-share listed firms and their top five (major) customers during the period 2008–2019, we find a significantly negative association. This association is robust in a series of robustness checks, including the use of instrumental variables estimations, propensity score matching procedure, and Heckman two-step sample selection model. The mitigating effect of supplier−customer proximity on crash risk is more pronounced for suppliers with lower corporate transparency and greater operational uncertainty. Finally, we identify two possible mechanisms through which geographically nearby major customers reduce suppliers’ crash risk: fewer financial restatements and higher accounting conservatism of suppliers. The findings of this study indicate that listed firms may choose geographically nearby customers to reduce crash risk. Keywords: Geographic proximity; Stock price crash risk; Information disclosure quality; Financial restatements; Accounting conservatism (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:bracre:v:54:y:2022:i:6:s0890838922000476 DOI: 10.1016/j.bar.2022.101118 Access Statistics for this article The British Accounting Review is currently edited by Nathan Lael Joseph and Alan Lowe More articles in The British Accounting Review from Elsevier |
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