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korean management review - Vol. 50, No. 3

[ Article ]
korean management review - Vol. 50, No. 3, pp.745-776
Abbreviation: kmr
ISSN: 1226-1874 (Print)
Print publication date 30 Jun 2021
Received 07 Jan 2021 Accepted 26 Jan 2021

The Effect of Sales Concentration to Major Customers on Earning Management and Risk
Jae-Hyeong Joo ; A-Reum Jung ; Do-Jin Jung ; Sung Whan Park
(First Author) Professor of department of accounting and taxation real estate at the Hanbat National University (
(Coresponding Author) Team leader of Center for Social value Enhancement Studies (
(Co-Author) Professor of College of Business Administration at Chung-Ang University (
(Co-Author) Professor of College of Economics and Business Administration, Hanbat National University (

주요고객 매출집중도가 이익조정 및 기업위험에 미치는 영향

This is an open access article distributed under the terms of the Creative Commons Attribution License 4.0, which permits unrestricted, distribution, and reproduction in any medium, provided the original work is properly cited.


The information on customer concentration is not only useful for a company's financial strategy, but also useful for investor's corporate valuation and investment strategy. This study empirically analyzed the effect of customer concentration on the earnings management, volatility of stock returns, and beta for manufacturing companies listed in the KOSPI market and the KOSDAQ market from 2011 to 2017.

The main analysis results are summarized as follows. First, discretionary accruals are used to decrease profits as the sales concentration increases. Second, firms with concentrated customer bases experience higher stock return volatility. Third, positive relation between customer concentration and a supplier’s beta. This is the first study to conduct an empirical analysis using the data on sales concentration of major customers sine the introduction of K-IFRS in 2011. And this study empirically confirmed the relationship between the sales concentration of major customers and earning management, volatility of stock price returns, beta. In addition, the results suggest that the information on the sales concentration of major customers is useful information for risk assessment and valuation, and it is necessary to improve the disclosure information of the sales concentration of major customers in the future.

Keywords: Major customer, Sales concentration, Disclosure level, earning management, risk assessment


This paper is a development of the first author’s doctoral dissertation.

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∙ The author Jae-Hyeong Joo is a professor of department of accounting and taxation real estate at the Hanbat National University. He graduated from Sogang and he received a master’s degree and Ph. D. in business administration from Chung-Ang University. After obtaining a certificate as a certified public accountant in 1984, he worked as a partner at Samil Accounting Corporation and served as vice chairman of the Korea Certified Public Accounting Society Ethics Investigation Committee and a researcher on information systems. His primary fields of interest are sales concentration, earning management and disclosure status.

∙ The author A-reum Jung is a Team leader of Center for Social value Enhancement Studies. She received a bachelors’ degree, a master’s degree, and Ph. D. in business administration from Chung-Ang University. Major research areas include disclosure system and ESG accounting.

∙ The author Do-Jin Jung is currently a professor of College of Business Administration at Chung-Ang University. He graduated from Sogang and received a master’s degree from Hanyang University. And he received a Ph. D. in business administration from the University of Kentucky in the United States. After acquiring his Ph.D., he worked as an assistant professor at West Texas A&M University and head of the Financial Supervisory Service's accounting system team. Major research areas include corporate value evaluation and disclosure system.

∙ The author Sung Whan Park is currently a professor of College of Economics and Business Administration, Hanbat National University. He received a bachelors’ degree, a master’s degree, and Ph. D. in business administration from Sogang University. His primary fields of interest are analysis and improvement study of financial reporting, public sector accounting and non-profit accounting.