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The product market power of major customer firms and their suppliers’ performance

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  • Guilong Cai
  • Jing Deng
  • Rui Ge
  • Guojian Zheng

Abstract

We find that when a major customer has greater market power in its industry, its supplier firm exhibits better performance. The effect of the major customer’s market power on its supplier’s performance is more pronounced when the economic bonding between the customer firm and the supplier is stronger, when the customer firm is geographically closer to its supplier, and when the relationship between the two firms matures. Furthermore, we document that a customer firm’s product market power increases demand stability for its supplier, reduces the supplier’s cost of debt, and improves the supplier’s investment efficiency.

Suggested Citation

  • Guilong Cai & Jing Deng & Rui Ge & Guojian Zheng, 2022. "The product market power of major customer firms and their suppliers’ performance," China Journal of Accounting Studies, Taylor & Francis Journals, vol. 10(4), pages 435-458, October.
    • Handle: RePEc:taf:rcjaxx:v:10:y:2022:i:4:p:435-458
    DOI: 10.1080/21697213.2022.2148907
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    Cited by:

    1. Chai Bin Feng & Muhammad Usman Khurram & Raheel Safdar & Sultan Sikandar Mirza & Amjad Iqbal, 2023. "Corporate strategic responses, supplier concentration and sustainable growth of chinese listed firms," Operations Management Research, Springer, vol. 16(3), pages 1413-1427, September.

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