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Customer concentration and target price accuracy

Author

Listed:
  • Mu-Shu Yun

    (National Chung Cheng University)

  • Lee-Young Cheng

    (National Chung Cheng University)

  • Yan Zhao

    (City College of New York, CUNY)

Abstract

The purpose of this study is to examine whether a supplier firm’s customer concentration affects its target price accuracy. We explore the relationship between target price accuracy and customer concentration using a sample of 1,081,396 target price forecasts in the U.S. Stock Exchange between 2000 and 2020. Our empirical results show that corporate customer concentration of a supplier firm is positively associated with its target price bias, whereas government customer concentration of a supplier firm is negatively associated with its target price bias. We further show that the positive relationship between corporate customer concentration and target price bias is more salient when customer switching costs are low.

Suggested Citation

  • Mu-Shu Yun & Lee-Young Cheng & Yan Zhao, 2023. "Customer concentration and target price accuracy," Review of Quantitative Finance and Accounting, Springer, vol. 61(3), pages 995-1028, October.
    • Handle: RePEc:kap:rqfnac:v:61:y:2023:i:3:d:10.1007_s11156-023-01174-z
    DOI: 10.1007/s11156-023-01174-z
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    References listed on IDEAS

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    More about this item

    Keywords

    Customer concentration; Target price bias; Switching costs;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G17 - Financial Economics - - General Financial Markets - - - Financial Forecasting and Simulation

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