Customer Relationship and Corporate Financial Asset Allocation: Evidence from China

Yifan Pan; Qiyuan Li; Yuchong Hu; Peishen Chen

doi:10.54097/fbem.v12i2.14773

Authors

Yifan Pan
Qiyuan Li
Yuchong Hu
Peishen Chen

DOI:

https://doi.org/10.54097/fbem.v12i2.14773

Keywords:

Customer relationship; Corporate financial asset allocation.

Abstract

Currently, the government regards preventing the risk of the real economy “de-realizing and virtualizing” as the main part of the economic work, in order to prevent the market risk brought by the excessive financialization of enterprises. This paper selects the A-share listed companies in China from 2008 to 2021 as the research sample data, and explores the impact mechanism of customer concentration on the financial asset allocation of enterprises, and the samples have passed the robustness and endogeneity tests to ensure the reliability of the benchmark regression results. The study finds that customer concentration has a significant inhibitory effect on the financial asset allocation of enterprises, and the results are more significant under the conditions of high earnings management, high financing constraints and low inventory turnover. Further, the study results show that customer concentration has a more significant inhibitory effect on the short-term allocation of financial resources by enterprises. This paper not only provides a theoretical basis for the study of the relationship between customer relations and corporate financial asset allocation, but also helps to clarify the dilemma of how the real economy and the virtual economy coexist and develop, and provides policy implications for preventing the market system reform of “de-realizing and virtualizing”.

Downloads

Download data is not yet available.

References

Shi, W. (2021). Analyzing enterprise asset structure and profitability using cloud computing and strategic management accounting. PloS one, 16(9), e0257826.

De Franco, G., Kothari, S. P., & Verdi, R. S. (2011). The benefits of financial statement comparability. Journal of Accounting research, 49(4), 895-931.

Jouanjean, M. A., Massa, I., & Ve Velde, D. W. (2015). The role of development finance institutions in promoting jobs and structural transformation. Development Finance Agenda (DEFA), 1(1), 16-21.

Wongsinhirun, N., Chatjuthamard, P., Jiraporn, P., & Lee, S. M. (2023). Customer concentration and shareholder litigation risk: Evidence from a quasi-natural experiment. Journal of Behavioral and Experimental Finance, 100862.

Thrassou, A., & Vrontis, D. (2009). A new consumer relationship model: the marketing communications application. Journal of Promotion Management, 15(4), 499-521.

Greiner, M. E., & Wang, H. (2010). Building consumer-to-consumer trust in e-finance marketplaces: An empirical analysis. International Journal of Electronic Commerce, 15(2), 105-136.

Hui, K. W., Liang, C., & Yeung, P. E. (2019). The effect of major customer concentration on firm profitability: competitive or collaborative?. Review of Accounting Studies, 24, 189-229.

Meng, C. (2018). Two essays on customer concentration and stock price crash risk.

Saboo, A. R., Kumar, V., & Anand, A. (2017). Assessing the impact of customer concentration on initial public offering and balance sheet–based outcomes. Journal of Marketing, 81(6), 42-61.

Pan, J., Yu, M., Liu, J., & Fan, R. (2020). Customer concentration and corporate innovation: Evidence from China. The North American Journal of Economics and Finance, 54, 101284.

Dong, Y., Li, C., & Li, H. (2021). Customer concentration and M&A performance. Journal of Corporate Finance, 69, 102021.

Peng, X., Wang, X., & Yan, L. (2019). How does customer concentration affect informal financing?. International Review of Economics & Finance, 63, 152-162.

Gulzar, M. A. (2011). Corporate governance characteristics and earnings management: Empirical evidence from Chinese listed firms. International Journal of Accounting and Financial Reporting, 1(1), 133.

Zhou, B., Li, Y., Huang, S., Guo, S., & Xue, B. (2019). Customer concentration and corporate innovation: Effects of financing constraints and managers’ expectation of Chinese listed companies. Sustainability, 11(10), 2859.

Ni, J., Cao, X., Zhou, W., & Li, J. (2023). Customer concentration and financing constraints. Journal of Corporate Finance, 102432.

Ak, B. K., & Patatoukas, P. N. (2016). Customer‐base concentration and inventory efficiencies: Evidence from the manufacturing sector. Production and Operations Management, 25(2), 258-272.

Henry, J. J., Christensen, P., & Brau, J. C. (2023). Interrelationships in Inventory Turnover Performance Between Supplier and Customer Firms. Business and Economics Research Journal, 14(2), 157-171.

Dhaliwal, D., Judd, J. S., Serfling, M., & Shaikh, S. (2016). Customer concentration risk and the cost of equity capital. Journal of Accounting and Economics, 61(1), 23-48.

Kozlowski, J. (2021). Long-term finance and investment with frictional asset markets. American Economic Journal: Macroeconomics, 13(4), 411-448.