06/29/2021
By Mary Lou Kelly

The Accounting Department in the Manning School of Business cordially invites you to attend a doctoral dissertation defense by Anqi Tao on “The Stabilizing Effect of Government Customer Concentration on Earnings Properties.”

Defense Date: Monday, July 12, 2021

Time: 10 a.m. to nooon

Location: Zoom Meeting

Dissertation Title: "The Stabilizing Effect of Government Customer Concentration on Earnings Properties"

Dissertation Committee Members:

  • Professor Khondkar Karim (Committee Chair), Department of Accounting, University of Massachusetts Lowell
  • Associate Professor Karen Jingrong Lin, Department of Accounting, University of Massachusetts Lowell
  • Assistant Professor Amy Huimin Chen, Department of Accounting, University of Massachusetts Lowell
  • Associate Professor Tunde Kovacs, Department of Finance, University of Massachusetts Lowell

Abstract: I investigate the effect of government customer concentration on suppliers’ earnings properties, including earnings smoothness, accrual quality, and earnings persistence. Suppliers of governments have unique reporting incentives of minimizing both political cost and risk of contract discontinuity. I argue that they may dampen the volatility of operating performance to avoid too-high or too-low earnings. I find that government customer concentration is positively associated with earnings smoothness, accrual quality and earnings persistence, supporting my argument. Furthermore, firms with high government concentration and earnings smoothness have low litigation risk and low likelihood of contract termination. The positive association between government customer concentration and earnings smoothness is not driven by volatility of firm fundamentals. It is also robust to identification tests including difference-in-differences test based on propensity score matching and entropy balancing method test. My findings highlight a unique reporting style of earnings by suppliers contracting with government customers.