Case & Working Paper
| Paper Number | KCB-WP-2025-005 |
|---|---|
| Title | Customer concentration and firm-specific information |
| Title(Other) | |
| Author | Daejin Kim ; Ryoonhee Kim ; Yongtae Kim |
| Publisher | KAIST College of Business |
| Abstract | This study examines the relation between customer concentration and firms’ information
environment. We find that firms with higher customer concentration have lower stock price synchronicity, suggesting that their stock prices reflect more firm-specific information. The customer concentration effect is more pronounced when the quality of customers’ information is higher. An instrumental variable regression confirms the customer concentration effect. We further show that the greater firm-specific information in the stock prices of firms with a concentrated customer base is driven mainly by private information, consistent with investors trading on information from customer sources. Additional analyses show that the effects of customer concentration on stock price synchronicity and the share of firm-specific private information in stock prices are more pronounced when an institutional investor holds shares in both the focal firm and its customer. Finally, we document greater insider trading and informed trading intensity for firms with higher customer concentration. |
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Contact : Kim, HaengRan ( hrkim@business.kaist.ac.kr )
