The Effect of Customer Relationship Concentration on Corporate Cash Holdings under Different Competitive Market Conditions: An Empirical Study Based on Enlisted Companies in China's Manufacture Industry

Abstract

Abstract:

Cash holding is an important decision of financial resources, which is affected by various corporate decisions, competitive market strategies and customer relationship in the product market. Based on the data of Chinese manufacturing firms listed during 2001 to 2013, this study examines the effect of customer relationship concentration on corporate cash holding. The result shows that the customer relationship concentration has significant positive effect on corporate cash holdings. The higher customer relationship concentration is, the more cash reserves firms will tend to hold. When the market conditions are considered, the positive effect will change significantly. If the competition is fierce, the dynamism or the uncertainty of market environment is strong, with customer relationship concentration increasing, firms' motivation to hold cash reserves will be magnified. In addition, for firms in a weak market position, the positive impact of customer relationship concentration on cash holdings will be significantly stronger than firms in a strong market position.

Key words: customer relationship concentration, cash holdings, competition intensity, uncertainty, dynamism, market position

Liu Duan, Wang Zhuqing. The Effect of Customer Relationship Concentration on Corporate Cash Holdings under Different Competitive Market Conditions: An Empirical Study Based on Enlisted Companies in China's Manufacture Industry[J]. , 2017, 29(4): 181-195.

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