The Profitability and Pricing of Major Customers

Posted: 7 Sep 2003

See all articles by Marty Gosman

Marty Gosman

Quinnipiac University

Patricia (Trish) M. Kelly

Vanderbilt University

Per Olsson

Duke University

Terry Warfield

University of Wisconsin - Wisconsin School of Business


We examine the profitability and valuation of retail firms identified by suppliers as major customers, using major customer relationships to proxy for unrecorded organizational-capital intangibles. Major customers have higher operating profitability and profitability persistence, with the sources of the higher profitability consistent with purported advantages of supply chain arrangements. The pricing of major customers is consistent with the market recognizing the level and over-time properties of operating profitability. Together, these results suggest that investors understand the profitability effects of unrecorded organizational intangible assets and that financial statement analysis can be used to further examine the valuation effects of such intangibles.

Keywords: Organizational Capital, Intangible Assets, Valuation, Profitability Properties

JEL Classification: M41, M44, G12

Suggested Citation

Gosman, Marty and Kelly, Patricia (Trish) M. and Olsson, Per Mikael and Warfield, Terry D., The Profitability and Pricing of Major Customers. Review of Accounting Studies, Forthcoming. Available at SSRN:

Marty Gosman

Quinnipiac University ( email )

275 Mt. Carmel Avenue
Hamden, CT 06518
United States
203-582-8755 (Phone)

Patricia (Trish) M. Kelly

Vanderbilt University ( email )

Box 514
Nashville, TN 37203
United States
615-322-8046 (Phone)
615-343-7094 (Fax)

Per Mikael Olsson

Duke University ( email )

Box 90120
Durham, NC 27708-0120
United States

Terry D. Warfield (Contact Author)

University of Wisconsin - Wisconsin School of Business ( email )

716 Langdon Street
Madison, WI 53706-1481
United States

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