Abstract
We examine the impact of customer concentration (CC) on initial public offering (IPO) pricing using the mandatory requirement of customer information disclosure by the China Securities Regulatory Commission as an external shock. Our findings suggest that when a firm has a high CC, its IPO discount is low. We interpret that IPO investors perceive high CC as a positive outlook for the IPO firm and therefore accept a high offer price. Thus, the IPO discount is low. In contrast, when a firm has one or more important related-party customers, the IPO discount is large.
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