Effect of Customer Concentration on Managers Compensation of listed companies in Tehran Stock Exchange

Companies to centralized customer have higher business risks, because a major customer loss could result in a significant reduction in the cash flow of the suppliers. Hence, managers request higher Compensation to cover this probable risk. Also, customer concentration allows managers to kind of bargaining, which can increase their cash Compensation. The main purpose of this research is to investigate the effect of customer concentration on the managers' compensation in listed companies at Tehran Stock Exchange. Multiple linear regression model has been used to test hypothesis based on combined data. Normal logarithm of cash compensation and three indicators including, major sales ratios (sales above 10%) to total sales, the Herfindahl-Hirshman index and the index of the presence or absence of a major customer in the company were used for measuring of managers' compensation amount and customer concentration respectively. The statistical population of this research included 140 companies selected by screening during the 2009-2016 period in Tehran Stock Exchange. The research evidence showed that customer concentration has a positive and significant effect on managers' compensation. In other words, in companies that concentration on a major customer is existed, managers' cash compensation are higher.