Corporate Environmental Risk and the Customer-Supplier Relationship

Finance

Speaker:Shantanu Banerjee, Lancaster University
Date: Tuesday 24 May 2016
Time: 1.45
Location: Constantine Leventis Teaching Room, Building: one

Further details

Abstract:

We provide empirical evidence on the adverse effects of supplier firms’ environmental risk exposure on their relationship with their principal customers.  We document that supplier firms with high environmental risk are less likely to have principal customers.  From large customers’ perspective, a higher level of environmental risk lowers a supplier firm’s probability of being chosen relative to its industry peers by its potential customer.  Conditional on an ongoing significant business relationship with a customer, supplier firms with high environmental risk have lower sales and shorter relationship duration with this customer.  These results are more pronounced when customers’ environmental risk is low.  Collectively, our findings suggest an important channel through which firms can benefit from being environmentally responsible