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Do major corporate customers deter supplier misconduct?

Author

Listed:
  • Chen, Jie
  • Su, Xunhua
  • Tian, Xuan
  • Xu, Bin
  • Zuo, Luo

Abstract

We examine whether major corporate customers can deter misconduct among their suppliers. Our findings indicate that firms with concentrated customer bases are less likely to commit misconduct and face lower penalties in equilibrium. We also observe a significant decline in supplier misconduct following the establishment of a major customer relationship. Furthermore, the deterrent effect of major customers is more pronounced when customer pressure to reduce supplier misconduct risk is higher. Additional analyses suggest that major customers exercise their exit option to penalize suppliers after acute violations. Overall, our results suggest that major customers play a crucial role in deterring supplier misconduct.

Suggested Citation

  • Chen, Jie & Su, Xunhua & Tian, Xuan & Xu, Bin & Zuo, Luo, 2025. "Do major corporate customers deter supplier misconduct?," Journal of Accounting and Economics, Elsevier, vol. 80(2).
    • Handle: RePEc:eee:jaecon:v:80:y:2025:i:2:s0165410125000370
    DOI: 10.1016/j.jacceco.2025.101801
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    References listed on IDEAS

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    JEL classification:

    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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