Customer stability, environmental uncertainty and the cost of debt

Purpose This study investigates the impact of customer stability on the cost of debt and the moderating effect of environmental uncertainty on the above relationship. Design/methodology/approach An empirical analysis based on the ordinary least squares (OLS) regression model is conducted using China’s A-share listed companies on the Shanghai and Shenzhen Stock Exchanges from 2007 to 2021. Findings The results indicate that customer stability significantly inhibits the cost of debt, and the higher the environmental uncertainty, the more significant the inhibitory effect of customer stability on the cost of debt. The results of heterogeneity analyses indicate that the more intense the industry competition, the higher the customer concentration or the older the average customer age, the more significant the inhibiting effect of customer stability on the cost of debt. Research limitations/implications This study highlights the importance of customer relationship management and supply chain risk management, which have both theoretical and managerial implications. Despite its contributions, this study has limitations, such as China’s institutional context limits, which the generalisability of our results, and the sample size for this study is small because of limitations in measuring customer stability. Originality/value Existing literature has not yet reached a consistent conclusion on how customer relationships affect the cost of debt, and such studies are mainly centered around perspectives such as customer concentration and the contagion effect of supply chains. This study constructs an indicator of customer stability using detailed information on the top five customers of China’s A-share listed companies and dynamically examines the impact of customer stability on the cost of debt, which expands the research on the influencing factors of the cost of debt, the economic consequences of customer stability and the theory of customer relationship management.

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Publication Details

Journal
Management Decision
Published
2024-12-23
DOI
https://doi.org/10.1108/md-07-2023-1268
Citations
8
Primary Topic
Supply Chain and Inventory Management
Type
article
Field-Weighted Citation Impact
4.23
Controls
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article

Customer stability, environmental uncertainty and the cost of debt

Yun Zhan, Jia Liao, Kangbo Liu
8 citations
Management Decision
Supply Chain and Inventory Management
4.23
article

Customer stability, environmental uncertainty and the cost of debt

Yun Zhan, Jia Liao, Kangbo Liu
article en
8 citations

Abstract

Purpose This study investigates the impact of customer stability on the cost of debt and the moderating effect of environmental uncertainty on the above relationship. Design/methodology/approach An empirical analysis based on the ordinary least squares (OLS) regression model is conducted using China’s A-share listed companies on the Shanghai and Shenzhen Stock Exchanges from 2007 to 2021. Findings The results indicate that customer stability significantly inhibits the cost of debt, and the higher the environmental uncertainty, the more significant the inhibitory effect of customer stability on the cost of debt. The results of heterogeneity analyses indicate that the more intense the industry competition, the higher the customer concentration or the older the average customer age, the more significant the inhibiting effect of customer stability on the cost of debt. Research limitations/implications This study highlights the importance of customer relationship management and supply chain risk management, which have both theoretical and managerial implications. Despite its contributions, this study has limitations, such as China’s institutional context limits, which the generalisability of our results, and the sample size for this study is small because of limitations in measuring customer stability. Originality/value Existing literature has not yet reached a consistent conclusion on how customer relationships affect the cost of debt, and such studies are mainly centered around perspectives such as customer concentration and the contagion effect of supply chains. This study constructs an indicator of customer stability using detailed information on the top five customers of China’s A-share listed companies and dynamically examines the impact of customer stability on the cost of debt, which expands the research on the influencing factors of the cost of debt, the economic consequences of customer stability and the theory of customer relationship management.

Management DecisionVol. 63(5)
Huaqiao University (CN), Fujian Agriculture and Forestry University (CN), China Construction Bank (CN)
Openalex Percentile: Top 5%
Supply Chain and Inventory Management
4.23
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