Accounting Seminar（2014-15）

Topic:Customer Concentration and Cost Structure

Speaker:Hsihui Chang(Drexel University)

Time:: Wednesday,17December, 13:00-14:30pm

Location:Room B35, Guanghua Building 2

Organizer:Department of Accounting,MPAcc GSM, PKU

Abstract：

This study examines the effects of customer concentration levels on firm cost structure decisions. Analyzing cost data from a sample of manufacturing firms for the years 1976 through 2013, we find a negative relationship between customer concentration and cost elasticity whereby firms exhibit lower proportions of variable-to-fixed costs in the presence of higher levels of customer concentration. Additionally, we identify product specificity and supplier industry competition as factors which influence the relationship between customer concentration and cost elasticity. These results are robust to alternate specifications of customer concentration and the inclusion of additional control variables. Our results suggest that managers consider the composition of their customer base when making critical cost structure decisions.

Your participation is warmly welcomed!