The effect of Concentration on Customer on the Corporate dividend payout policy

Companies with customer concentration, have high business and liquidity risk, because major customer loss can lead to a significant reduction in cash flows from suppliers. Hence, managers tend to increase the amount of additional cash to reduce their business risk. Lower dividend payout in the company can reduce the cash outflow as an intra-organizational strategy, and create additional cash flows for the company. The main purpose of this research is to investigate the effect of customer concentration on dividend payout policy in listed companies in Tehran Stock Exchange. To test the hypotheses of the research, have been used multiple linear regression model and logit model. To measure the company's dividend payout policy from the cash dividend ratio to net earnings and the dummy variable of the payment or non-payment of dividends, and to concentration on customer, of three measurement major sales ratios (sales above 10%) to sales total, the the Herfindahl–Hirschman Index, and Indicator variable of existence or absence of major customer in the company has been used. The statistical population of this research includes 140 active companies in Tehran Stock Exchange during 2009-2016. The results of the research indicate that the concentration on customer has a negative and significant effect on dividend payout policy. In other words, in companies with concentration on major customer, the percentage of dividend payments and the probability of cash dividend payout is lower.