Research On Correlation Between Customer Concentration And Working Capital From The Perspective Of The Nature Of Property Right

In the era of big data, when information expands rapidly and market environment becomes increasingly complex, the development model of single-core business which traditional companies pursue has radically changed. More and more companies have realized that only with establishing long-term cooperation mechanism with upstream and downstream stakeholders on the supply chain and realizing the frequent exchange of information and strategic interaction can they gather more information about the price of raw materials, production processes and changes in market demand to keep the dominant position in the fierce competition of product market. What’s more, as a kind of resource of an enterprise, large customers often play an important role in maintaining the stability of sales, reducing costs and enhancing reputation and corporate value (Kalwani,1995; Johnson,2010). However, the resulting high level of customer concentration also adds to new worries about the future development of enterprise, which include the impact on the financial decisions. Based on the data of "the proportion of sales of the company’s top five customers to total sales" in the listed company’s annual report, this paper discusses how the level of customer concentration impacts the level of working capital and cash holdings of a company from the perspective of the nature of property rights, in order to enrich the research on the influencing factors of working capital and cash holdings from a new perspective and provide inspiration for non-state-owed enterprises about the supply chain management and financial decision-making.Based on the empirical studying using the samples of listed manufacturing companies in China’s stock market in 2010-2013, this paper found that, firstly, due to prudence and governance role of large customers, the higher the level of customer concentration of manufacturing companies,the more working capital and cash they hold; secondly, compared to state-owed enterprises, the relationship between the level of customer relationship and the working capital and cash is more positive in non-state-owed enterprises which have less stable customer relationships and more difficulties in financing. In addition, further studying on the samples of non-state-owned enterprises reveals that the improvement of business environment will significantly undermine the above positive correlation in non-state-owned enterprises, and the intense competition will strengthened the positive correlation between costumer concentration and cash holdings, but the impact of competition on the correlation between costumer concentration and working capital is not significant.