Do Major Customers Influence Voluntary Corporate Disclosure?

Cao, Jian; Hsieh, Hsin-Yi; Kohlbeck, Mark J.

doi:10.2139/ssrn.2318651

Cited by 8 publications

(5 citation statements)

References 31 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…This could lead to a positive association between customer concentration and the frequencies of management earnings and sales forecasts. Consistent with the bargaining power argument, Cao et al () find that firms that rely more on major customers are more likely to issue quarterly earnings forecasts. In addition, private communication may be seen as less credible than public management forecasts because public forecasts are subject to litigation and reputation considerations (Kothari et al ; Skinner , ; Ali et al ) .…”

Section: Prior Studies and Hypothesis Developmentmentioning

confidence: 86%

Customer Concentration and Public Disclosure: Evidence from Management Earnings and Sales Forecasts

Crawford

Huang²,

Li³

et al. 2020

Contemporary Accting Res

100

View full text Add to dashboard Cite

This study examines the association between customer base concentration and corporate public disclosure policy. When the customer base is more concentrated, large customers face lower costs of accessing the supplier firm's private information, reducing customers' overall demand for the supplier's public information, suggesting a negative association between customer concentration and the amount of public disclosure. Alternatively, large customers have greater bargaining power and may demand that the supplier firm provide more public disclosures. Consistent with customer concentration facilitating private information flow from the supplier to customers, we find that the frequencies of management earnings and sales forecasts are negatively associated with customer concentration among firms with major corporate customers. These associations are stronger when the supplier and customers are engaged in more relationship‐specific investments, when customers' private information acquisition costs are lower, and when it is less costly for customers to find another supplier.

show abstract

Section: Prior Studies and Hypothesis Developmentmentioning

confidence: 86%

Customer Concentration and Public Disclosure: Evidence from Management Earnings and Sales Forecasts

Crawford

Huang²,

Li³

et al. 2020

Contemporary Accting Res

100

View full text Add to dashboard Cite

show abstract

“…To illustrate the breadth of the economic forces we study, and to minimize concern that any of our empirical findings are setting-specific, we test for unimodal voluntary disclosure in two distinct empirical settings--capital investments and major customers. Importantly, our prediction of a non-linear relation that flips sign explains why some studies of voluntary disclosure in these settings find evidence of a positive linear relation (e.g., Cao et al 2013), while others find evidence of a negative linear relation (e.g., Crawford et al 2020).…”

Section: Introductionmentioning

confidence: 71%

Voluntary disclosure when private information and disclosure costs are jointly determined

2021

View full text Add to dashboard Cite

Classical models of voluntary disclosure feature two economic forces: the existence of an adverse selection problem (e.g., a manager possesses some private information) and the cost of ameliorating the problem (e.g., costs associated with disclosure). Traditionally these forces are modelled independently. In this paper, we use a simple model to motivate empirical predictions in a setting where these forces are jointly determined––where greater adverse selection entails greater costs of disclosure. We show that joint determination of these forces generates a pronounced non-linearity in the probability of voluntary disclosure. We find that this non-linearity is empirically descriptive of multiple measures of voluntary disclosure in two distinct empirical settings that are commonly thought to feature both private information and proprietary costs: capital investments and sales to major customers.

show abstract

“…A customer can choose public disclosure or more credible internal channels to enhance suppliers' assurance of its future earnings prospects and the ability of fulfiling contractual obligations. Regarding public disclosure, Cao et al (2013) find that firms tend to issue management earnings forecasts to communicate their earnings prospects with supply chain partners. As long as customers issue management forecasts publicly, these forecasts are likely to be consistent with the forecasts privately communicated with suppliers, because any inconsistency is likely to arouse suppliers' concerns about the credibility of customers' management, which is harmful for maintaining a long-lasting trading relationship (Feng & Li, 2014).…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

“…As for supplier characteristics, we follow Cao et al (2013) to include the importance of the trading relationship to suppliers (Importance), calculated as a supplier's sales to the firm divided by the supplier's total revenue. Besides, we include suppliers' total sales (Sup Sales), profitability (Sup ROA) and growth opportunity (Sup MB).…”

Section: Model Specificationmentioning

confidence: 99%

Top executives’ school-tie connections and management forecast disclosure

Luo

2020

China Journal of Accounting Studies

View full text Add to dashboard Cite

This paper investigates whether top executives' dependence on social connections has an impact on the information environment of listed companies. Specifically, this paper explores the role of school ties between firms' and suppliers' top executives on management earnings forecasts, an important channel of public information disclosure. We find a negative relation between a firm's school ties with its suppliers and the likelihood/frequency to issue management forecasts, indicating that top executives' school ties in a way substitute management forecasts and become the information channel along the supply chain. Further, we find the association is stronger when the firm faces higher proprietary cost or operational uncertainty, but the association becomes weaker when suppliers have bargaining advantage over the firm. Finally, we find the decrease in management forecast disclosure driven by school-tie connections weakens the access of firm-specific information for external information users, which may put individual investors in a more vulnerable position.

show abstract

Do Major Customers Influence Voluntary Corporate Disclosure?

Cited by 8 publications

References 31 publications

Customer Concentration and Public Disclosure: Evidence from Management Earnings and Sales Forecasts

Customer Concentration and Public Disclosure: Evidence from Management Earnings and Sales Forecasts

Voluntary disclosure when private information and disclosure costs are jointly determined

Top executives’ school-tie connections and management forecast disclosure

Contact Info

Product

Resources

About