Business

Exploring the impact of customer concentration on stock price crash risk

M. Afghahi, F. Nassirzadeh, et al.

This study explores how customer concentration impacts stock price crash risk in Iran, revealing an intriguing inverse relationship and the role of institutional investors in this dynamic. Conducted by Mahla Afghahi, Farzaneh Nassirzadeh, and Davood Askarany, this research offers fresh insights into the financial behavior of companies in developing markets.

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Playback language: English

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Abstract

This paper investigates the relationship between stock price crash risk and customer concentration in Iran, a developing nation. Using three novel indicators to measure corporate and government customer concentration (proportion of significant customer sales, Herfindahl-Hirschman Index, and a Ranking Index), the study examines data from 82 companies listed on the Tehran Stock Exchange from 2013 to 2020. Results show an inverse relationship between the highest concentration level of corporate and government customer concentration (measured by the Ranking Index) and stock price crash risk. Institutional investors positively moderate the relationship between corporate customer concentration and crash risk but not the relationship between government customer concentration and crash risk.

Publisher

Humanities and Social Sciences Communications

Published On

Jul 02, 2024

Authors

Mahla Afghahi, Farzaneh Nassirzadeh, Davood Askarany

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