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Major Customer Reliance and SG&A Cost Sensitivity

Author

Listed:
  • Haomin Zhang
  • Ci Zhang
  • Zhijun Lin
  • Di Fan

Abstract

This paper examines the impact of major customer reliance on the sensitivity of selling, general and administrative (SG&A) costs in response to sales fluctuations. Utilising an expanded cost sensitivity model and conducting a thorough analysis of US‐listed firms, we uncover that supplier firms with a higher degree of dependence on major customers demonstrate a notably decreased sensitivity of SG&A costs to both increases and decreases in sales. Furthermore, our analysis reveals that the negative association between major customer reliance and SG&A cost sensitivity is significantly influenced by factors such as industry characteristics, relationship‐specific investments and customer types. Finally, our insights into SG&A costs can be extended to encompass total costs and operating costs, offering valuable insights into broader cost management dynamics and strategies.

Suggested Citation

  • Haomin Zhang & Ci Zhang & Zhijun Lin & Di Fan, 2025. "Major Customer Reliance and SG&A Cost Sensitivity," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 65(3), pages 2609-2625, September.
    • Handle: RePEc:bla:acctfi:v:65:y:2025:i:3:p:2609-2625
    DOI: 10.1111/acfi.70008
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    References listed on IDEAS

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