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Are Major Customers Friends or Masters? Evidence from Customer Fraud Revelations

Shantanu Banerjee et al.

Review of Corporate Finance Studies2026https://doi.org/10.1093/rcfs/cfaf028article
AJG 3ABDC A*
Weight
0.50

Abstract

Downstream customer firms’ bargaining power can lead to suboptimal diversification in upstream suppliers’ innovation when customers cannot commit to a long-term relationship. After the revelation of financial fraud by a major customer, suppliers surprisingly outperform a control group in terms of sales growth, Tobin’s q, and survival likelihood over a 10-year period. Our results suggest that, before a fraud revelation, supplier managers’ short decision horizons and aversion to short-term risk enable influential customers to demand relation-specific innovation, leading to suboptimal diversification. When customer importance weakens, suppliers engage in riskier and novel innovation, thereby stimulating sales growth. (JEL G14, G3, L14, L24)

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https://doi.org/https://doi.org/10.1093/rcfs/cfaf028

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@article{shantanu2026,
  title        = {{Are Major Customers Friends or Masters? Evidence from Customer Fraud Revelations}},
  author       = {Shantanu Banerjee et al.},
  journal      = {Review of Corporate Finance Studies},
  year         = {2026},
  doi          = {https://doi.org/https://doi.org/10.1093/rcfs/cfaf028},
}

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Are Major Customers Friends or Masters? Evidence from Customer Fraud Revelations

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Evidence weight

0.50

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.