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korean management review - Vol. 51 , No. 5

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korean management review - Vol. 51, No. 5, pp. 1243-1269
Abbreviation: kmr
ISSN: 1226-1874 (Print)
Print publication date 31 Oct 2022
Received 01 Aug 2022 Revised 18 Aug 2022 Accepted 23 Aug 2022
DOI: https://doi.org/10.17287/kmr.2022.51.5.1243
The Moderating Effect of Family Control on the Relationship Between Customer Concentration and Stock Price Crash Risk
Seun-Young Park ; Sung Whan Park
(First Author) Assistant Professor, School of Public Administration and Research Institute of Public Affairs, Kyungpook National Univ, Republic of Korea (sypark13@knu.ac.kr)
(Co-Author) Professor of College of Economics and Business Administration at Hanbat National University (psh630@hanbat.ac.kr)
고객집중도와 주가폭락위험: 공급사가 가족기업인 경우 조절효과

Copyright 2011 THE KOREAN ACADEMIC SOCIETY OF BUSINESS ADMINISTRATION 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.

Abstract

Upon adoption of K-IFRS in 2011, Korean firms are required to disclose the existence of a major customer that account for 10 percent or more of the firm's revenue (hereinafter CC). This study investigates the relationship between CC and the firm's future stock price crashes. Further, we analyze whether the relationship between them is attenuated in case of family-controlled firms. Using the non-financial firms listed in KOSPI between years 2011 to 2017, we find that CC is positively associated with future stock price crashes. Further analysis reveals that the positive relationship between them is negatively moderated when the supply firms are controlled by family shareholders. Overall, the evidence suggests that the firms with a more concentrated customer-base are likely to withhold bad news, possibly leading to future stock price crashes. On the other hand, the positive relationship between them can be attenuated in family firms owing to their unique characteristics. Under the recent management paradigm shift from shareholder-capitalism to stakeholder-capitalism, the suppliers’ risk management can be an important issue for a firm’s sustainability. By providing the association between CC and suppliers’ future crash risk, this study may shed light on the practice of firm’s implementation of stakeholder-oriented management.


Keywords: Customer concentration, Stock price crash risk, Family firms, Stakeholder-capitalismt

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∙ The author Seun-Young Park is currently an assistant professor of School of Public Administration, Kyungpook National University. She graduated from Ewha Womans University and received a master’s degree from KDI School of Public Policy and Management, and Ph. D. in business administration from Ewha Womans University. Major research areas include both the private and public sectors’ accounting, audit and governance.

∙ 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.