Customer Relationship Transactions, External Supervision and Earnings Persistence

With 2010 to 2015 A-share listed companies as research samples, this paper studieshow customer relationship trade affect earnings persistence and how does an external oversight mechanism, such as institutional investors'holdings and "bigfour" audits, regulate the impact of customer relationship transactions on earnings persistence. The study found that the greater the size of customer relationship transactions, the lower the persistence of earnings, moreover, the "big four" audit and institutional investor holdings further reinforce the significant relationship between customer relationship transactions and earnings persistence. The results show that the stable relationship between the transaction, which greatly enhance the company's earnings persistence, and in the process, showing the "big four" audit value-added features and the effect of institutional investors holding for corporate governance.