Exploring the impact of customer concentration on stock price crash risk

Mahla Afghahi (), Farzaneh Nassirzadeh () and Davood Askarany ()
Additional contact information
Mahla Afghahi: Ferdowsi University of Mashhad
Farzaneh Nassirzadeh: Ferdowsi University of Mashhad
Davood Askarany: The University of Auckland

Palgrave Communications, 2024, vol. 11, issue 1, 1-15

Abstract: Abstract This paper, rooted in agency theory, explores the intricate relationship between stock price crash risk and customer concentration within the context of Iran, a developing nation. Utilising innovative indicators to measure corporate and government customers, we address inconsistent findings in existing research and offer fresh insights into stock price crash risk dynamics. Focusing on 82 companies listed on the Tehran Stock Exchange from 2013 to 2020, our study employs a robust methodological framework, including panel data, multiple regression and three distinct metrics to measure customer concentration. Specifically, we introduce the proportion of significant customer sales, the Herfindahl-Hirschman Index, and a Ranking Index based on substantial customer sales. Our investigation reveals a noteworthy inverse relationship between the highest concentration level of corporate customer concentration, as measured by the Ranking Index, and stock price crash risk. Similarly, we establish an inverse association between the Ranking Index for government customer concentration and stock price crash risk. Moreover, institutional investors positively influence the correlation between corporate customer concentration and stock price crash risk but do not exert a discernible impact on the relationship between government customer concentration and stock price crash risk.

Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1057/s41599-024-03069-3 Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:palcom:v:11:y:2024:i:1:d:10.1057_s41599-024-03069-3

Ordering information: This journal article can be ordered from
https://www.nature.com/palcomms/about

DOI: 10.1057/s41599-024-03069-3

Access Statistics for this article

More articles in Palgrave Communications from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().