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Supplier Concentration and Tone Management: Evidence From China

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  • Qianrui Xu
  • Siwen Fu
  • Feng Yang

Abstract

By analysing the influence of concentrated suppliers on disclosure tone, we provide empirical evidence that managers inflate the tone in forward‐looking statements. This effect is more pronounced in firms with weak bargaining power, suggesting that managers strategically emphasise favourable information to preserve bargaining positions. Furthermore, the incentive for tone manipulation is particularly prominent among firms requiring relationship‐specific investments (RSIs) or better trade credit terms—such as those facing financial constraints or cash shortages—but is muted when the supplier–customer information asymmetry is low. Evidence shows that firms presenting a more positive tone obtain more trade credits and RSIs in the following years.

Suggested Citation

  • Qianrui Xu & Siwen Fu & Feng Yang, 2025. "Supplier Concentration and Tone Management: Evidence From China," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 65(4), pages 4138-4157, December.
    • Handle: RePEc:bla:acctfi:v:65:y:2025:i:4:p:4138-4157
    DOI: 10.1111/acfi.70074
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