The Effect of Customers Concentration on Company Risks
The companies with major customers can supply a considerable source of cash flows by selling a large portion of their products to them. Since the lack of purchase, loss, or bankruptcy of major customers can result in a significant reduction in cash flows in the company, thus the risk is the companie...
| Main Authors: | , |
|---|---|
| Format: | Article |
| Language: | English |
| Published: |
Iran Finance Association
2020-04-01
|
| Series: | Iranian Journal of Finance |
| Subjects: | |
| Online Access: | https://www.ijfifsa.ir/article_117894_874280b887d6cd99d247c7769776f038.pdf |
| _version_ | 1798013838849736704 |
|---|---|
| author | Ebrahim Abbasi Ali Tamoradi |
| author_facet | Ebrahim Abbasi Ali Tamoradi |
| author_sort | Ebrahim Abbasi |
| collection | DOAJ |
| description | The companies with major customers can supply a considerable source of cash flows by selling a large portion of their products to them. Since the lack of purchase, loss, or bankruptcy of major customers can result in a significant reduction in cash flows in the company, thus the risk is the companies with major customers is higher than other companies. Thus, the present study aimed to investigate the effect of customer concentration on company risks. For this purpose, the effect of customer concentration on three criteria of stock price crash risk, bankruptcy risk, and employment risk was studied. The research sample included 127 companies listed in the Tehran Stock Exchange during 2011-2018. Multivariate regression models with panel data were used by the random-effects method to test the research hypotheses. The research findings indicated that customer concentration has a significant positive effect on stock price crash risk, bankruptcy risk, and employment risk. In other words, stock price crash risk, bankruptcy risk, and employment risk are higher in the companies where the concentration of major customers is higher. |
| first_indexed | 2024-04-11T15:07:57Z |
| format | Article |
| id | doaj.art-0fbdf94fbc18478ea3035918d36311cb |
| institution | Directory Open Access Journal |
| issn | 2676-6337 2676-6345 |
| language | English |
| last_indexed | 2024-04-11T15:07:57Z |
| publishDate | 2020-04-01 |
| publisher | Iran Finance Association |
| record_format | Article |
| series | Iranian Journal of Finance |
| spelling | doaj.art-0fbdf94fbc18478ea3035918d36311cb2022-12-22T04:16:43ZengIran Finance AssociationIranian Journal of Finance2676-63372676-63452020-04-0142193910.22034/ijf.2020.227184.1118117894The Effect of Customers Concentration on Company RisksEbrahim Abbasi0Ali Tamoradi1Associate Prof., Department of Management, Faculty of Social Sciences and Economics, Alzahra University, Tehran, Iran.Instructor, Department of Accounting, Payame Nour University of Ramhormoz, Ramhormoz, Iran.The companies with major customers can supply a considerable source of cash flows by selling a large portion of their products to them. Since the lack of purchase, loss, or bankruptcy of major customers can result in a significant reduction in cash flows in the company, thus the risk is the companies with major customers is higher than other companies. Thus, the present study aimed to investigate the effect of customer concentration on company risks. For this purpose, the effect of customer concentration on three criteria of stock price crash risk, bankruptcy risk, and employment risk was studied. The research sample included 127 companies listed in the Tehran Stock Exchange during 2011-2018. Multivariate regression models with panel data were used by the random-effects method to test the research hypotheses. The research findings indicated that customer concentration has a significant positive effect on stock price crash risk, bankruptcy risk, and employment risk. In other words, stock price crash risk, bankruptcy risk, and employment risk are higher in the companies where the concentration of major customers is higher.https://www.ijfifsa.ir/article_117894_874280b887d6cd99d247c7769776f038.pdfcustomer concentrationstock price crash riskbankruptcy riskemployment risk |
| spellingShingle | Ebrahim Abbasi Ali Tamoradi The Effect of Customers Concentration on Company Risks Iranian Journal of Finance customer concentration stock price crash risk bankruptcy risk employment risk |
| title | The Effect of Customers Concentration on Company Risks |
| title_full | The Effect of Customers Concentration on Company Risks |
| title_fullStr | The Effect of Customers Concentration on Company Risks |
| title_full_unstemmed | The Effect of Customers Concentration on Company Risks |
| title_short | The Effect of Customers Concentration on Company Risks |
| title_sort | effect of customers concentration on company risks |
| topic | customer concentration stock price crash risk bankruptcy risk employment risk |
| url | https://www.ijfifsa.ir/article_117894_874280b887d6cd99d247c7769776f038.pdf |
| work_keys_str_mv | AT ebrahimabbasi theeffectofcustomersconcentrationoncompanyrisks AT alitamoradi theeffectofcustomersconcentrationoncompanyrisks AT ebrahimabbasi effectofcustomersconcentrationoncompanyrisks AT alitamoradi effectofcustomersconcentrationoncompanyrisks |