Accounting comparability and customer concentration

Abstract

This study examines the relationship between accounting comparability and customer concentration. Higher accounting comparability enhances customers’ ability to evaluate suppliers’ performance against their industry peers. This allows suppliers to attract more customers, hence reducing their customer concentration. We find a negative association between accounting comparability and customer concentration. This relation is stronger for firms with better profitability, higher information asymmetry, and more innovations. By establishing a link between accounting comparability and customer concentration, our study provides additional evidence about the consequences of accounting comparability and is helpful to both academics and practitioners.