Customer Concentration, Product Market Competition And Debt Financing Costs

With the advent of the big data era and the complex market environment,the business philosophy of enterprises has changed fundamentally,that is,from the previous mononuclear development to the development mode of cooperation between upstream and downstream of supply chain.The close cooperation between the upstream and downstream of the supply chain will bring some big customers to the enterprise.On the one hand,the existence of the big customers may promote the good development of the enterprise,such as it may reduce the cost of the enterprise,stabilize the sales of the enterprise,increase the visibility of the enterprise,and so on.On the other hand,if the customer concentration is too high,it will also bring a series of bad effects to the business operation,such as the business risk is one of them.As usual It is inferred that if the customer concentration of the enterprise is too high,it means that the buyer’s bargaining power is relatively strong,and the enterprise may be disadvantaged by the oppression of the buyer’s power.In the course of operation,the profit is likely to be encroached upon and the risk of failure is increased.In view of the research of customer concentration and debt financing cost,this paper mainly uses the method of combining literature research and empirical research to deeply explore it.Based on the data of Shanghai and Shenzhen A shares(excluding gem)listed companies in China from 2012 to 2018,this paper mainly analyzes the relationship between customer concentration,product market competition and debt financing cost.After excluding the financial,insurance and data missing sample companies,11530 valid data were obtained.The results show that the higher the customer concentration of listed companies,the higher the cost of debt financing,which is mainly due to the higher customer concentration will increase As a result,the cost of debt financing is increased,and the higher the risk of default and liquidation,the higher the cost of debt financing.Further research shows that the more competitive the listed companies are in the product market,the more significant the increase effect of customer concentration on the cost of debt financing.This is mainly due to the higher operating risk faced by the highly competitive enterprises compared with the enterprises in the lower market competition,thus increasing the concern of the large customers about the business development and then considering the termination of the cooperation with the enterprises,which means that the enterprises will face the loss The risk of going to the main customers further increases the operating risk of the enterprise,so the positive correlation effect of customer concentration on the cost of debt financing is more significant.In addition,because of the unique institutional background of our country,we further study how the relationship between customer concentration and debt financing cost is different under different institutional background,and the results show that the positive correlation between the two is more significant in non-state-owned enterprises.In order to alleviate the endogenous problem between customer concentration and debt financing cost,this paper lags the customer concentration data for one time,and then returns to the debt financing cost.In addition,this paper also carries on the related robustness test,including the replacement guest The measurement of household concentration and debt financing cost,as well as the grouping of product market competition to study whether its impact on the relationship is consistent with the previous,the final results are consistent with the previous,which also verifies the robustness of the research conclusions.The above conclusions mainly enlighten the relevant departments and enterprises to pay attention to the disclosure of customer concentration information,but also to pay attention to the degree of competition in the enterprise itself,to consider the operating risks brought by the two,and to make the correct management strategy,so as to avoid the excessive cost of debt financing.This paper mainly analyzes the relationship between customer concentration,product market competition and debt financing cost.The first part is an introduction.It mainly introduces the research background,research significance,research methods and main contents of this paper,and briefly explains the research framework of this paper by drawing flow chart.And debt financing costs and other concepts are defined,and explain the relevant theoretical basis involved in this paper;the fourth part is to study the derivation of hypotheses and the establishment of models,mainly through theoretical derivation and put forward the four hypotheses of this paper,and then combined with previous research and measurement knowledge to establish research models.The fifth part is the empirical test,which mainly through big data to prove the impact of customer concentration on debt financing costs,further study the product market competition and the nature of property rights how to affect the relationship between the two,and carry out a robustness test;the last part is the research conclusions and policy recommendations,as well as the research limitations and prospects of this paper.