Stock Price Crash Risk of Customers and Entrepreneurial Performance of Suppliers

Nowadays, stock market crash has become a common phenomenon in which the stock price volatility of customers will inevitably affect supplier companies. Using data of enterprises of Growth Enterprise Market of China covering 2015 to 2019, this paper investigates the influence of stock price crash risk of customers on the entrepreneurial performance of suppliers. Our findings show that the customers' crash risk leads to a decrease in suppliers' entrepreneurial performance. This negative effect is more pronounced when the supplier faces with insider sales or good information environment. Further analysis shows that supplier investor sentiment plays a full mediating role in the relationship between customers' stock price crash risk and suppliers' entrepreneurial performance. Our study theoretically expands this research in stock price crash risk and corporate performance, and sheds light on the cross enterprise economic consequences of stock price crash risk and its functional mechanism.