Supply Chain Concentration and Corporate Default Risk: Evidence from China

Renyuan Gu; Yangyue   Huang; Qiying Li; Zihong Zhong; Qisong Wang

doi:10.62177/apemr.v3i3.1476

Authors

Renyuan Gu Zhuhai College of Science and Technology
Yangyue Huang Zhuhai College of Science and Technology
Qiying Li Zhuhai College of Science and Technology
Zihong Zhong Zhuhai College of Science and Technology
Qisong Wang Zhuhai College of Science and Technology

DOI:

https://doi.org/10.62177/apemr.v3i3.1476

Keywords:

Supply Chain Concentration, Customer Concentration, Default Risk, Supplier Concentration

Abstract

Supply chain concentration constitutes a pivotal governance structure shaping corporate operational resilience. Using data on Chinese A-share listed firms from 2001 to 2022, this study estimates expected default probability via the KMV model and employs a random-effects Tobit model to correct for left-censoring in the dependent variable. Panel estimation results reveal that elevated supply chain concentration significantly reduces corporate default probability, with this effect operating through both customer concentration and supplier concentration dimensions. To address endogeneity, we construct an instrumental variable using the number of Ming Dynasty post stations and apply the control function approach to correct for bias. The corrected estimates confirm the risk mitigation effect of supply chain concentration.

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References

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