Corporate customer concentration and stock price crash risk

Xiaofang Ma, Wenming Wang, Jiangang Wu and Wenlan Zhang

Journal of Banking & Finance, 2020, vol. 119, issue C

Abstract: Using a large sample of U.S. firms, we find that major corporate customer concentration is positively associated with a firm's future stock price crash risk. This positive relation is more pronounced when the supplier firms have made a higher level of relationship-specific investments, have a poorer information environment, and/or face lower customer switching costs. Our evidence suggests that exposure to an undiversified corporate customer base can have a negative bearing on a firm's crash risk.

Keywords: Crash risk; Corporate customer concentration; Relationship-specific investments; Customer switching costs; Information environment (search for similar items in EconPapers)
JEL-codes: G14 G32 L14 L22 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (24)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:119:y:2020:i:c:s0378426620301692

DOI: 10.1016/j.jbankfin.2020.105903

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