Abstract: Taking 4994 panel data from China’s listed manufacturing companies from 2008 to 2012 as samples and considering the nature of property right and the scale factor, this paper studies the influential effect of supplier-customer relationship on enterprises’ decision making of cash holding. The results indicate that the higher the customer concentration is, the more inclined the suppliers are to hold more cash to fulfill the commitments to customers and to prevent the risk of losing customers. Due to the weaker anti-risk capability, non-state-owned companies have stronger motivations for cash-holding preventability and commitment. Further study also finds out that the smaller the scale of non-state-owned enterprises is, the stronger the positive relationship between the customer concentration and cash holding level will be. Through the robustness tests from many angles, it is found that the above conclusion is still valid.

Key words: customer concentration; cash holding; precautionary motive; panel data