Do Major Customers Affect Suppliers' ESG Activities?

55 Pages Posted: 20 Sep 2023

See all articles by Feng Dong

Feng Dong

Siena College - School of Business

John A. Doukas

Old Dominion University - Strome College of Business

Rongyao Zhang

Youngstown State University

Stephanie Walton

Louisiana State University, Baton Rouge - Department of Accounting

Yiyang Zhang

Youngstown State University - Lariccia School of Accounting and Finance

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Abstract

This study examines whether major customers affect supplier firms' Environmental, Social, and Governance (ESG) activities. We find that companies with higher customer concentration engage in less ESG activities while directing more resources towards other long-term value-enhancing activities. This association is attenuated for suppliers with fewer business segments, customers with higher bankruptcy risk and lower switching costs, and during elevated equity market sentiment periods. We also provide compelling evidence that companies with at least one major customer tend to exhibit a greater propensity to invest in technology and maintain a higher level of intangible assets. Collectively, our findings demonstrate that the composition of suppliers' customer base has a notable adverse effect on their level of engagement in ESG activities.

Keywords: Customer concentration, Principal customer, ESG activities

Suggested Citation

Dong, Feng and Doukas, John A. and Zhang, Rongyao and Walton, Stephanie and Zhang, Yiyang, Do Major Customers Affect Suppliers' ESG Activities?. Available at SSRN: https://ssrn.com/abstract=4577271 or http://dx.doi.org/10.2139/ssrn.4577271

Feng Dong (Contact Author)

Siena College - School of Business

John A. Doukas

Old Dominion University - Strome College of Business ( email )

2080 Constant Hall
Suite 2080
Norfolk, VA 23529-0222
United States
757-683-5521 (Phone)

HOME PAGE: http://www.efmaefm.org/0DOUKAS/doukas.php

Rongyao Zhang

Youngstown State University ( email )

Youngstown, OH 44555
United States

Stephanie Walton

Louisiana State University, Baton Rouge - Department of Accounting ( email )

E.J. Ourso College of Business Administration
2800 Business Education Complex
Baton Rouge, LA 70803
United States

Yiyang Zhang

Youngstown State University - Lariccia School of Accounting and Finance ( email )

United States

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