Customer Concentration and Stock Price Crash Risk : Evidence from Iranian firms

Articles in Press

Document Type : Original Article

Author

Department of accounting, Bandargaz Branch, Islamic Azad University, Bandargaz, Iran

10.22034/iaas.2022.327318.1236

Abstract

Customer relationship management encourages firms to attract and retain majority customers for future corporate transactions. However, greater dependency on majority customers results in certain risks for firms. As such, the present study is concerned with investigating the effect of customer concentration on the corporate stock price crash risk. in doing so, two measures of negative skewness of stock returns and bottom-up volatility are employed to compute stock price crash risk, and Herfindahl-Hirschman Index serves to calculate customer concentration. The research hypothesis is built on a sample of 96 firms listed on the Tehran Stock Exchange during the years 2016-2020 and tested using multivariate regression model based on panel data. The results suggest that higher customer concentration results in the enhancement of stock price crash risk. moreover, the results of sensitivity analysis reveal that using an alternative proxy to measure customer concentration fails to exert any significant influence on the research results, thereby confirming the robustness of the findings

Keywords

Accounting and Auditing Studies

Articles in Press, Accepted Manuscript
Available Online from 23 October 2022

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