Research on the Relationship Between Big Customer Dependence and Capital Allocation Efficiency

Jiangrui Hu

doi:10.54097/18ye5384

Authors

Jiangrui Hu

DOI:

https://doi.org/10.54097/18ye5384

Keywords:

Big customer dependence, Customer concentration, Enterprise capital allocation efficiency.

Abstract

This paper explores the relationship between big customer dependence and capital allocation efficiency by taking the data of China's A-share listed companies from 2008 to 2020 as samples. The increasing dependence on big customers leads to lower the efficiency of capital allocation, which is manifested by an increased probability of underinvestment. Further research shows that heavy reliance on customers only has a significant adverse effect on the capital allocation efficiency of non-soes; Moreover, the impact of big customer dependence on capital allocation efficiency is not related to the investment opportunities, but to the business risk. The higher the business risk, the more significant the influence is. This paper enriches the literature on big customer dependence and firm capital allocation efficiency at the theoretical level. In addition, based on the research conclusions, this paper makes relevant suggestions for stakeholders and policy makers, and provides relevant enlightenment for systematically understanding the impact of big customer dependence on corporate capital allocation efficiency, which has practical significance.

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