Customer concentration and corporate financialization: Evidence from non-financial firms in China

Abstract

This study investigates the potential impact of customer concentration on corporate financialization using a sample of Chinese non-financial listed firms. The findings reveal a positive correlation between customer concentration and a supplier’s level of financialization. Customer concentration can drive corporate financialization by amplifying the operating risks suppliers face, diminishing their operational efficiency, and weakening external oversight from other stakeholders. Furthermore, supplementary research indicates that the previously mentioned positive influence diminishes when suppliers are state-owned, have pronounced financing constraints, operate within less competitive industries or regions characterized by higher levels of financial marketization, and/or encounter elevated economic policy uncertainty. The implications of our findings extend to enriching the existing body of literature concerning customer-supplier relationships. Moreover, our study offers valuable insights for future investigations into the governance mechanisms underlying corporate financialization.