Customer referencing and capital market benefits: Evidence from the cost of equity

• 成果类型: Article
• 署名作者: Jing, Jiao; Myers, Linda A.; Ng, Jeffrey; Su, Lixin (Nancy)
• 署名单位: University of Jinan; University of Tennessee System; University of Tennessee Knoxville; University of Hong Kong; Hong Kong Polytechnic University
• 刊物名称: CONTEMPORARY ACCOUNTING RESEARCH
• ISSN/ISSBN: 0823-9150
• DOI: 10.1111/1911-3846.12850
• 发表日期: 2023
• 页码: 1448-1486
• 关键词: IMPLIED COST; CORPORATE REPUTATION; company reputation; DISCLOSURE LEVEL; Trade credit; supply chain; INFORMATION; earnings; RISK; QUALITY

摘要

Customer referencing is a strategy that firms can use to disclose their connections with reputable customers as a means of enhancing their own reputations. We study the capital market benefits of naming reputable nonmajor customers in firms' financial reports to provide empirical evidence on whether this form of customer referencing has important practical implications. We predict and find that firms enjoy a lower cost of equity when they engage in customer referencing in their financial reports, consistent with the argument that this form of voluntary disclosure increases investor attention and customer certification. In cross-sectional analyses, we predict and find that the benefits of customer referencing are more pronounced for firms that (1) lack major customers or reputable major customers, (2) name customers whose reputations exceed their own, and (3) face higher competition. Overall, our study provides evidence that communicating certain interorganizational connections can generate capital market benefits for disclosing firms.