This research examines how a firm with concentrated customer base affects its stock liquidity. We propose two competing hypotheses to test this association. We also discover the channels for this association from the angles of customers’ bargaining power, suppliers’ corporate governance quality, and the length of customer-supplier relationships. To further deal with the endogeneity concerns, we use M&A waves in customers’ industries (downstream industry mergers) to instrument for customer concentration. We also follow Cen et al. (2017) and use relationship establishment as event study to conduct DID analysis to examine the impact of customer–supplier relationships on supplier’s stock liquidity. Lastly, we also propose a few robustness tests to verify our empirical results.
|Effective start/end date||1/08/20 → 31/07/21|
UN Sustainable Development Goals
In 2015, UN member states agreed to 17 global Sustainable Development Goals (SDGs) to end poverty, protect the planet and ensure prosperity for all. This project contributes towards the following SDG(s):
- Customer Concentration
- Bargaining Power
- Stock Liquidity
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