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Customer Base Concentration
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Book Synopsis Customer-Base Concentration, Profitability and the Relationship Life Cycle by : Paul J. Irvine
Download or read book Customer-Base Concentration, Profitability and the Relationship Life Cycle written by Paul J. Irvine and published by . This book was released on 2019 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt: Using a recently expanded data set on supplier-customer links, we introduce a dynamic relationship life-cycle hypothesis. We hypothesize that the relation between customer-base concentration and profitability is significantly negative in the early years of the relationship, but becomes positive as the relationship matures. The key driver of this dynamic is the customer-specific investments that the relationship entails. These investments result in larger fixed costs, greater operating leverage and a higher probability of losses early in the relationship, but can significantly benefit the firm as the relationship matures. Although many of these money-losing firms in early-stage relationships were not studied in Patatoukas (2012), we find a market reaction to increases in customer concentration similar to that in his paper. This result provides powerful confirmatory evidence of the value of customer concentration. We document one of the intangible benefits of customer concentration, technology sharing, and show how this benefit increases as the relationship matures.
Book Synopsis Customer-Base Concentration by : Panos N. Patatoukas
Download or read book Customer-Base Concentration written by Panos N. Patatoukas and published by . This book was released on 2014 with total page 49 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study investigates whether and how customer-base concentration affects supplier firm fundamentals and stock market valuation. I compile a comprehensive sample of supply chain relationships and develop a measure (CC) to capture the extent to which a supplier's customer base is concentrated. In contrast to the conventional view of customer-base concentration as an impediment to supplier firm performance, I document a positive contemporaneous association between CC and accounting rates of return, suggesting that efficiencies accrue to suppliers with concentrated customer bases. Consistent with a cause-and-effect link between customer-base concentration and supplier firm performance, analysis of intertemporal changes demonstrates that CC increases predict efficiency gains in the form of reduced operating expenses per dollar of sales and enhanced asset utilization. Using stock returns tests, I find that investors underreact to the implications of changes in customer-base concentration for future firm fundamentals when setting stock prices. A trading strategy that exploits investors' underreaction yields abnormal stock returns over the thirty-year period studied.
Book Synopsis Customer-Base Concentration, Investment, and Profitability by : Daniel A. Cohen
Download or read book Customer-Base Concentration, Investment, and Profitability written by Daniel A. Cohen and published by . This book was released on 2019 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine whether customer-base concentration has a differential impact on profitability for firms contracting with major government customers versus firms contracting with major corporate customers. We document that firm profitability increases with the concentration of major government customers but decreases with the concentration of major corporate customers. We attribute the contrasting results to the differential impact of major government and corporate customers on demand uncertainty. Specifically, firms contracting with major government customers face lower demand uncertainty that enables them to realize more efficiency gains from customer-specific investments, whereas firms contracting with major corporate customers are exposed to higher demand uncertainty that reduces the efficiency of customer-specific investments. Overall, our study suggests that major government customers are unique and important in the composition of customer base and they impact firm outcomes in a significantly different way than major corporate customers.
Book Synopsis Customer-Base Concentration and Inventory Efficiencies by : B. Korcan Ak
Download or read book Customer-Base Concentration and Inventory Efficiencies written by B. Korcan Ak and published by . This book was released on 2016 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: What is the link between customer-base concentration and inventory efficiencies in the manufacturing sector? Using hand-collected data from 10-K Filings, we find that manufacturers with more concentrated customer bases hold fewer inventories for less time and are less likely to end up with excess inventories, as indicated by the lower likelihood and magnitude of inventory write-downs and reversals. Using disaggregated inventory disclosures, we find that inventory efficiencies primarily flow through the finished goods inventory account, while raw material efficiencies are offset by higher work-in-process holdings and longer work-in-process cycles. In additional analysis, we document a valuation premium for more concentrated manufacturers after controlling for other firm characteristics, including default risk and cost of capital estimates. We conclude that investors trade off the costs and benefits of relationships with a limited number of major customers and, on balance, consider customer-base concentration as a net positive for firm valuation. Overall, our study adds to interdisciplinary research in accounting and operations management by shedding new light on the relevance of major customer disclosures for fundamental analysis and valuation in the manufacturing sector.
Book Synopsis The Relationship Between Customer-Base Concentration and R&D Performance : Evidence from American Software Industry by : 曾慧中
Download or read book The Relationship Between Customer-Base Concentration and R&D Performance : Evidence from American Software Industry written by 曾慧中 and published by . This book was released on 2014 with total page 92 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis The Relation Between Customer-Base Concentration and R&D Decision : Evidence from American Software Industry by : 郭建容
Download or read book The Relation Between Customer-Base Concentration and R&D Decision : Evidence from American Software Industry written by 郭建容 and published by . This book was released on 2014 with total page 93 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Customer Concentration and Public Disclosure by : Steve Crawford
Download or read book Customer Concentration and Public Disclosure written by Steve Crawford and published by . This book was released on 2019 with total page 54 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study examines the association between customer base concentration and corporate public disclosure policy. When the customer base is more concentrated, large customers face lower costs of accessing the supplier firm's private information, reducing customers' overall demand for the supplier's public information, suggesting a negative association between customer concentration and the amount of public disclosure. Alternatively, large customers have greater bargaining power and may demand the supplier firm provide more public disclosures. Consistent with customer concentration facilitating private information flow from the supplier to customers, we find that the frequencies of management earnings and sales forecasts are negatively associated with customer concentration among firms with major corporate customers. These association are stronger when the supplier and customers are engaged in more relationship-specific investments, when customers' private information acquisition costs are lower, and when it is less costly for customers to find another supplier.
Book Synopsis Customer-Base Concentration by : Gopal V. Krishnan
Download or read book Customer-Base Concentration written by Gopal V. Krishnan and published by . This book was released on 2018 with total page 51 pages. Available in PDF, EPUB and Kindle. Book excerpt: What are the implications of major customer dependency, i.e., the degree of a supplier firm's dependency on its major customers, for external auditors? While the conventional view emphasizes the negatives of major customer dependency for client business risk, we find that suppliers with more concentrated customer bases spend less on audit fees. The negative association between audit fees and customer-base concentration holds after controlling for a wide array of client firm and auditor characteristics. The evidence is consistent with reduced audit effort due to efficiency gains in the audit process, especially when suppliers with more concentrated customer bases share the same auditors with their long-standing major customers. The audit fee discount we identify does not imply that audit quality declines with customer-base concentration. In fact, we find that suppliers with more concentrated customer bases are less likely to experience material restatements of previously audited financial statements, which implies a positive link between audit quality and major customer dependency. Overall, our study contributes to research in accounting and operations management on inter-organizational relationships by exploring the interplay of customer-base concentration with client business risk and audit complexity. Taking the external auditors' perspective, our study provides new managerial insights on the costs and benefits of major customer relationships for supplier firms.
Book Synopsis Customer-base Concentration and the Transmission of Idiosyncratic Volatility Along the Vertical Chain by : Atanas Mihov
Download or read book Customer-base Concentration and the Transmission of Idiosyncratic Volatility Along the Vertical Chain written by Atanas Mihov and published by . This book was released on 2016 with total page 69 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper investigates the link between a firm's customer-base concentration and stock return volatility. We find that firms with more concentrated customer bases have higher idiosyncratic volatility. Further, we show significant variation in customer-base concentration effects across customer and supplier firm dimensions, including customer type, customer default probability, customer idiosyncratic volatility, customer customer-base concentration, extended trade credit, and industry product market competition. Our results are robust to potential endogeneity concerns, different estimation methodologies and volatility measures, among numerous other robustness checks. Overall, our results contribute to the understanding of idiosyncratic volatility sources in firm stock returns and provide new evidence on the transmission of firm-specific shocks in a supply-chain network environment.
Book Synopsis Customer Concentration Risk and the Cost of Equity Capital by : Dan S. Dhaliwal
Download or read book Customer Concentration Risk and the Cost of Equity Capital written by Dan S. Dhaliwal and published by . This book was released on 2015 with total page 56 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study investigates the relation between customer concentration and a supplier's cost of equity capital. We hypothesize that a more concentrated customer base increases a supplier's risk, which results in a higher cost of equity. Our results show a positive association between customer concentration and a supplier's cost of equity, and this relation is more pronounced for suppliers that are more likely to lose major customers or that are more prone to larger losses if they lose such customers. Further, results from a propensity score matched sample analysis and instrumental variables regressions imply that our findings are robust to accounting for endogeneity. We also provide evidence that a supplier with a concentrated base of safer government customers has a lower cost of equity. Finally, we document a positive relation between corporate customer concentration and a supplier's cost of debt. Overall, our findings suggest that the composition and concentration of a supplier's customer base significantly impact its financing costs.
Author : Publisher :Oxford University Press ISBN 13 :0198915543 Total Pages :1345 pages Book Rating :4.1/5 (989 download)
Download or read book written by and published by Oxford University Press. This book was released on with total page 1345 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Customer Concentration and Corporate Tax Avoidance by : Henry He Huang
Download or read book Customer Concentration and Corporate Tax Avoidance written by Henry He Huang and published by . This book was released on 2018 with total page 53 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine the relation between customer concentration, a critically important aspect of a firm's business model, and the level of corporate tax avoidance. A firm with a concentrated corporate customer base needs to hold more cash, faces a higher likelihood of financial distress, has a stronger incentive to manage earnings upwards, and is likely to be more risk tolerant. Since tax planning can increase both cash flow and accounting earnings and risk tolerant firms are more likely to accept the risks inherent in tax avoidance activities, we hypothesize that corporate customer concentration is positively associated with tax avoidance. As predicted, we find that various measures of corporate customer concentration are positively related to tax avoidance as measured by effective tax rate and book-tax difference. We also document that this positive relation is more pronounced when the firm captures a lower market share in its industry, enjoys less revenue diversification, and engages in less real earnings management. By contrast, we contend that a governmental major customer provides stable cash flow to suppliers and thus alleviates their need for tax avoidance. Consistent with this reasoning, we find that firms engage in lower levels of tax avoidance when they have a governmental major customer, and this association is less pronounced under Democratic presidencies. Together, our findings indicate that a firm's business model (i.e., corporate and governmental major customer) has a significant effect on the extent to which it avoids taxes.
Book Synopsis Customer Concentration and Stock Price Crash Risk by : Jeong-Bon Kim
Download or read book Customer Concentration and Stock Price Crash Risk written by Jeong-Bon Kim and published by . This book was released on 2018 with total page 55 pages. Available in PDF, EPUB and Kindle. Book excerpt: We investigate the impact of customer concentration on stock price crash risk. Customer concentration may represent a source of significant cash flow and business risk for supplier firms or benefit supplier firms in terms of efficient product, inventory and supply chain management. Using a large sample of firms for the period of 1977-2016, we find that corporate customer concentration is positively associated with stock price crash risk. We find, however, that governmental customer concentration is negatively associated with stock price crash risk. Further analyses show that our results are robust to potential endogeneity and reverse causality concerns. In the cross-sectional analyses, we find that the likelihood that a supplier firm with concentrated customer base experiencing higher crash risk is attenuated by lower switching cost and is accentuated when the degree of information asymmetry is high.
Book Synopsis The Disruption Dilemma by : Joshua Gans
Download or read book The Disruption Dilemma written by Joshua Gans and published by MIT Press. This book was released on 2016-03-18 with total page 177 pages. Available in PDF, EPUB and Kindle. Book excerpt: An expert in management takes on the conventional wisdom about disruption, looking at companies that proved resilient and offering managers tools for survival. “Disruption” is a business buzzword that has gotten out of control. Today everything and everyone seem to be characterized as disruptive—or, if they aren't disruptive yet, it's only a matter of time before they become so. In this book, Joshua Gans cuts through the chatter to focus on disruption in its initial use as a business term, identifying new ways to understand it and suggesting new tools to manage it. Almost twenty years ago Clayton Christensen popularized the term in his book The Innovator's Dilemma, writing of disruption as a set of risks that established firms face. Since then, few have closely examined his account. Gans does so in this book. He looks at companies that have proven resilient and those that have fallen, and explains why some companies have successfully managed disruption—Fujifilm and Canon, for example—and why some like Blockbuster and Encyclopedia Britannica have not. Departing from the conventional wisdom, Gans identifies two kinds of disruption: demand-side, when successful firms focus on their main customers and underestimate market entrants with innovations that target niche demands; and supply-side, when firms focused on developing existing competencies become incapable of developing new ones. Gans describes the full range of actions business leaders can take to deal with each type of disruption, from “self-disrupting” independent internal units to tightly integrated product development. But therein lies the disruption dilemma: A firm cannot practice both independence and integration at once. Gans shows business leaders how to choose their strategy so their firms can deal with disruption while continuing to innovate.
Book Synopsis Customer Concentration, Bad News Withholding, and Stock Price Crash Risk by : Yangyang Chen
Download or read book Customer Concentration, Bad News Withholding, and Stock Price Crash Risk written by Yangyang Chen and published by . This book was released on 2019 with total page 60 pages. Available in PDF, EPUB and Kindle. Book excerpt: We investigate whether the presence of major corporate customers affects firm stock price crash risk. Using data on a large sample of U.S. firms, we find that firms with a more concentrated customer base have a higher stock price crash risk. Further, we show an amplified effect of customer concentration on crash risk for firms that attach more importance to customer relations and an attenuated effect for firms with stronger third-party monitoring. Overall, we find that a concentrated customer base imposes performance pressure on managers. This induces them to withhold bad news, which ultimately results in future stock price crashes.
Book Synopsis Fuzzy Classification of Online Customers by : Nicolas Werro
Download or read book Fuzzy Classification of Online Customers written by Nicolas Werro and published by Springer. This book was released on 2015-02-26 with total page 148 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book introduces a fuzzy classification approach, which combines relational databases with fuzzy logic for more effective and powerful customer relationship management (CRM). It shows the benefits of a fuzzy classification in contrast to the traditional sharp evaluation of customers for the acquisition, retention and recovery of customers in online shops. The book starts with a presentation of the basic concepts, fuzzy set theory and the combination of relational databases and fuzzy classification. In its second part, it focuses on the customer perspective, detailing the central concepts of CRM, its theoretical constructs and aspects of analytical, operational and collaborative CRM. It juxtaposes fuzzy and sharp customer classes and shows the implications for customer positioning, mass customization, personalization, customer assessment and controlling. Finally, the book presents the application and implementation of the concepts in online shops. A detailed case study presents the application and a separate chapter introduces the fuzzy Classification Query Language (fCQL) toolkit for implementing these concepts. In its appendix the book lists the fuzzy set operators and the query language’s grammar.
Download or read book Be Different! written by Stan Silverman and published by Business Expert Press. This book was released on 2019-11-28 with total page 214 pages. Available in PDF, EPUB and Kindle. Book excerpt: The fundamental goal of any business is to be different—to be better than those with whom it is competing. Every company should be on a journey to be the preferred provider of products or services to its markets by offering a great customer/client experience. A preferred provider is the company that customers and clients preferentially want to do business with, and often can charge a premium for what they provide. The fundamental goal of any individual is to be different—to be better than those with whom they are competing for that next job, whether internally or externally at a new company. Their goal is to demonstrate to the hiring manager that they are the best choice for that position. This book teaches how to be different. It is based on personal experience serving in the trenches as a CEO as well as a director on public, private and nonprofit boards.
