Customer concentration and target price accuracy

Mu-Shu Yun (), Lee-Young Cheng () and Yan Zhao ()
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Mu-Shu Yun: National Chung Cheng University
Lee-Young Cheng: National Chung Cheng University
Yan Zhao: City College of New York, CUNY

Review of Quantitative Finance and Accounting, 2023, vol. 61, issue 3, No 7, 995-1028

Abstract: Abstract The purpose of this study is to examine whether a supplier firm’s customer concentration affects its target price accuracy. We explore the relationship between target price accuracy and customer concentration using a sample of 1,081,396 target price forecasts in the U.S. Stock Exchange between 2000 and 2020. Our empirical results show that corporate customer concentration of a supplier firm is positively associated with its target price bias, whereas government customer concentration of a supplier firm is negatively associated with its target price bias. We further show that the positive relationship between corporate customer concentration and target price bias is more salient when customer switching costs are low.

Keywords: Customer concentration; Target price bias; Switching costs (search for similar items in EconPapers)
JEL-codes: G14 G17 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s11156-023-01174-z

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