Research On The Impact Of Customer Concentration On Corporate Information Disclosure

With the establishment of the Shanghai Stock Exchange and the Shenzhen Stock Exchange in the 1990 s,China’s capital market is also improving and developing,and the number and value of listed companies are increasing.As one of the important resources of the capital market,information directly affects the decision-making of investors and the allocation of market resources.High quality information disclosure is the lifeline to maintain the healthy development of the capital market.It is an important window for regulators and investors to truly understand the basic appearance and dynamics of enterprises.It has an important impact on investors’ decision-making and the healthy development of the capital market.However,over the years,there have been frequent problems in the quality of enterprise information disclosure in China’s capital market,such as the "shuangkang" 10 billion fraud event in 2019,and information disclosure violations such as illegal guarantee and non disclosure of major creditor’s rights and debts by Xindazhou and High Tech University of technology.Moreover,behind these events,it is related to the high customer concentration of many enterprises and the strategic impact of customer concentration on enterprise information disclosure.How to improve the quality of corporate information disclosure is an urgent issue in China’s capital market at this stage,and it is also a hot issue in academic research.Among them,the research on the influencing factors of corporate information disclosure has attracted many scholars’ attention.However,the current research is mainly focused on macroeconomics,media,analyst tracking,industry competition,institutional investors and so on,and rarely discusses the impact of the most important non-financial stakeholders of enterprises key customers on enterprise information disclosure.However,in reality,large customers,as important objects that enterprises must pay attention to in their business strategies in the market,directly affect their sales and market share,and customer concentration has multiple effects such as risks and governance on business management activities.This paper holds that the impact of customer concentration on enterprise information disclosure is more subtle than that on enterprise business activities and performance.In the information released by the management,although the annual report has a standardized release format and strict disclosure requirements,there are still earnings management and timing options that are not easy to identify.Performance forecast information is also difficult to detect.In terms of timing,management has greater freedom to choose.Under the influence of customer concentration factors,management may be more inclined to use textual tone manipulation to cooperate with earnings management behavior.Therefore,studying the information disclosure of customer focused enterprises can better understand the complex influencing factors of enterprise information disclosure and the real intention of management.Key customers may have risk effects and governance effects on enterprise operation and management activities.As an important feature of customer relationship,customer concentration also has two sides on enterprise information disclosure.On the one hand,when the risk effect is dominant,the company may at any time bear potential risks to the company’s operations such as the loss of major customers or changes in business needs,which increases the probability of the company falling into business difficulties,leading to risks to external investors and management Expected to increase.In order to cope with business uncertainty and reduce the risk expectations of external investors,management may choose to disclose information out of defensive motives and risk aversion motives,and adopt an unusually positive tone to cushion the impact of negative information on investors,thereby reducing the impact of negative information on investors.The quality of corporate information disclosure.On the other hand,when the governance effect is dominant,customer concentration means that customers have strong negotiating capabilities.The dominant position of large customers enables them to supervise the opportunistic behavior of the management and inhibit the management’s strategic information disclosure behavior,and improve the quality of information disclosure.In addition,the role of customer concentration is affected by the characteristics of individual customers.This article carried out an in-depth analysis and demonstration of the above viewpoints,and empirically tested whether customer concentration has an impact on corporate information disclosure decision-making and the quality of information disclosure,and which effect is dominant.On the basis of combing the relevant literature and theories,this article focuses on the following questions:(1)When the company chooses the timing of information disclosure,is the timing of information disclosure more easily affected by customer concentration? Which is the advantage of the risk effect and governance effect of customer concentration? What is its path of action?(2)When companies consider the text content of information disclosure,as an effective supplement to financial information,will the management’s text intonation manipulation be affected by customer concentration? Which side dominates the risk effect and governance effect of customer concentration? What is its action path?(3)In the evaluation of enterprise information disclosure quality,will customer concentration affect the evaluation of enterprise information disclosure quality? Which side dominates the risk effect and governance effect of customer concentration?(4)Is the role of customer concentration affected by the differences among government customers,listed customers and related customers?When there are differences in the market competition environment and internal control quality,does the impact of customer concentration on enterprise information disclosure show different results?In order to answer the above questions,based on the manually collected data on the sales proportion of the top five customers and individual characteristics of customers of listed companies from 2008 to 2018,this paper systematically investigates the impact of customer concentration on the timing,text characteristics and information disclosure quality of enterprise information disclosure,and deeply explores the mechanism of these effects.At the same time,this paper systematically investigates the regulatory role of internal and external environment and customer heterogeneity between customer concentration and information disclosure timing,text intonation manipulation and information disclosure quality,and further discusses the economic consequences of enterprise strategic information disclosure under the influence of customer concentration.The specific conclusions of this study are as follows:(1)High customer concentration will reduce the timeliness of voluntary information disclosure by companies,and companies with high customer concentration tend to delay the disclosure of bad news.The communication and acquisition of private information between companies and major customers reduces the motivation for companies to disclose information publicly,and because high customer concentration will increase business risks,management will strategically choose the time for information disclosure in order to reduce investors’ attention,so as to reduce the timeliness of information disclosure.However,if government customers,listed customers,and related customers account for a high proportion of the top five customers,it can reduce the negative impact of customer concentration on the timeliness of information disclosure.In addition,the influence of customer concentration on the timing of mandatory information disclosure is not obvious.(2)High customer concentration will make companies more likely to manipulate text intonation,and this influence also exists in voluntary and mandatory information disclosure text information.The research in this paper confirms that corporate business risks and executive equity incentives are the intermediary paths through which customer concentration affects the tone manipulation of corporate information disclosure texts.However,if government customers,listed customers,and related customers account for a high proportion of the top five customers,it can effectively reduce the positive impact of customer concentration on corporate text intonation manipulation.(3)High customer concentration will reduce the quality of corporate information disclosure,and the higher the customer concentration,the lower the quality of corporate information disclosure and the higher the probability of corporate information disclosure violations.Customer concentration has a negative impact on the quality of corporate information disclosure through dedicated asset investment,untimely information disclosure,and reduced analysts’ willingness to follow up.However,if government customers,listed customers,and non-related customers account for a high proportion of the current five largest customers,it will be able to weaken the negative impact of customer concentration on the quality of information disclosure,thereby improving the quality of information disclosure.(4)The intensity of market competition,the competitive position of the enterprise,and the quality of internal control of the enterprise have a moderating effect on the relationship between customer concentration and the timing of information disclosure and text characteristics.(5)From the perspective of economic consequences,although the strategic information disclosure of companies with high customer concentration will bring good market responses in the short term,they will not improve their future performance.In addition,for companies with high customer concentration,low-quality information disclosure will increase the risk of future stock price collapse and reduce the company’s future performance.This indicates that the opportunistic information disclosure strategy of companies with high customer concentration is a highcost behavior.The main contributions of this article are as follows: First,customer concentration is brought into the research framework of enterprise information disclosure,which enriches the research results of the influencing factors of enterprise information disclosure.The existing research on the factors affecting corporate information disclosure mainly discusses two aspects of corporate external factors and internal factors.The external factors are mainly concentrated in the macroeconomic environment,market competition environment,local legal environment and other perspectives,and there are few discussions on the impact of large customers on corporate information disclosure from the perspective of corporate non-financial stakeholders.Moreover,existing research mainly focuses on one aspect of voluntary information disclosure or mandatory information disclosure,and it is rarely included in the same framework for comparative research.This article takes the customer concentration,which represents an important characteristic of customer relationships,as an entry point,and deeply explores the impact of customer concentration on the timing,text characteristics and quality of corporate information disclosure,and compares the impact of customer concentration on voluntary and mandatory information disclosure behaviors.The difference between the company’s information disclosure strategy and the research on the factors affecting the quality of information disclosure has been expanded.Second,from the perspective of individual customer characteristics,this paper makes a new explanation for the impact of customer concentration on enterprise decision-making behavior,especially information disclosure behavior.The role of customer concentration is deeply affected by individual characteristics of customers.For companies with high customer concentration,customer characteristics are more important,but existing research only focuses on the average effect of customer concentration on the overall level.This paper examines the different effects of customer concentration on the timing of corporate information disclosure,the characteristics of information disclosure text,and the quality of information disclosure from the perspective of the nature of the customer’s property rights,whether it is listed or not,and the associated relationship.The research confirms that high-quality customers(government customers,listed the existence of customers)can inhibit management’s strategic information disclosure and improve the quality of information disclosure,thereby helping to more fully understand the impact of customer relationships on corporate information disclosure behavior.Third,it reveals the mechanism of customer concentration on corporate information disclosure,and explores the difference in the role of customer concentration on corporate information disclosure from the perspective of the internal and external environment of the enterprise.Specifically,this article explores the role of customer concentration on information disclosure behavior from the perspectives of corporate operating risks,private information acquisition costs,corporate equity incentives,and the number of analysts tracked.It also thoroughly examines the intensity of market competition,the competitive position of companies,and the three factors of internal control quality have a moderating effect on the relationship between customer concentration and corporate information disclosure behavior,which enriches the existing research.