Abstract
We study how the customer concentration of targets impacts the occurrence and structure of mergers and acquisitions (M&A). We hypothesize and find that acquirers respond to customer concentration-related risk by placing fewer bids for targets with greater customer concentration and by using more stock payment in their offers. These relations vary predictably with major customer-related uncertainty. Our findings extend the literature by documenting an important risk factor in M&A and by quantifying the economic consequences of customer concentration.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 1314-1355 |
| Number of pages | 42 |
| Journal | Journal of Business Finance and Accounting |
| Volume | 49 |
| Issue number | 7-8 |
| DOIs | |
| State | Published - Jul 1 2022 |
| Externally published | Yes |
Keywords
- bid likelihood
- business risk
- customer concentration
- major customers
- mergers and acquisitions
- payment method
ASJC Scopus subject areas
- Accounting
- Business, Management and Accounting (miscellaneous)
- Finance