{"status":"ok","message-type":"work","message-version":"1.0.0","message":{"indexed":{"date-parts":[[2026,7,29]],"date-time":"2026-07-29T14:08:25Z","timestamp":1785334105638,"version":"3.55.0"},"posted":{"date-parts":[[2026]]},"group-title":"SSRN","reference-count":0,"publisher":"Elsevier BV","license":[{"start":{"date-parts":[[2026,1,1]],"date-time":"2026-01-01T00:00:00Z","timestamp":1767225600000},"content-version":"unspecified","delay-in-days":0,"URL":"https:\/\/www.uspto.gov\/ip-policy\/copyright-policy\/copyright-basics"}],"content-domain":{"domain":[],"crossmark-restriction":false},"short-container-title":[],"abstract":"<jats:p>Customer concentration risk (CCR) is an economically significant yet insufficiently incorporated determinant of firm risk in many small and private companies. Despite its economic relevance, existing valuation models largely neglect CCR and implicitly assume diversified revenue structures typical of large public firms. In many companies, however, a small number of customers account for a substantial share of revenues, creating structural dependence. This dependence increases exposure to both customer-specific and common shocks, yet conventional estimates of cost of capital do not adequately reflect this risk. This paper develops a framework integrating CCR based on cash flow decomposition techniques into peer group-based beta estimation. As part of that, the model introduces a customer correlation coefficient that captures revenue co-movements across customers, thereby enabling a more holistic measurement of CCR beyond simplified traditional measures. The results show that higher customer concentration and stronger revenue co-movement increase systematic risk, thereby raising the cost of capital and producing economically substantial downward valuation adjustments relative to traditional models. Ignoring CCR in peer group beta estimation thus results in a systematic valuation bias. Overall, the study provides a transparent and practically applicable approach for incorporating CCR into cost of capital estimation.<\/jats:p>","DOI":"10.2139\/ssrn.6763898","type":"posted-content","created":{"date-parts":[[2026,7,29]],"date-time":"2026-07-29T13:30:43Z","timestamp":1785331843000},"source":"Crossref","is-referenced-by-count":0,"title":["&lt;p&gt;&lt;span&gt;When a Few Clients Matter: Measuring and Valuing Customer Concentration Risk&lt;\/span&gt;&lt;\/p&gt;"],"prefix":"10.2139","author":[{"ORCID":"https:\/\/orcid.org\/0009-0007-0668-9522","authenticated-orcid":true,"given":"Armin","family":"Hagel","sequence":"first","affiliation":[],"role":[{"vocabulary":"crossref","role":"author"}]},{"given":"Matthias","family":"Meitner","sequence":"additional","affiliation":[],"role":[{"vocabulary":"crossref","role":"author"}]}],"member":"78","container-title":[],"original-title":[],"deposited":{"date-parts":[[2026,7,29]],"date-time":"2026-07-29T13:30:43Z","timestamp":1785331843000},"score":1,"resource":{"primary":{"URL":"https:\/\/www.ssrn.com\/abstract=6763898"}},"subtitle":[],"short-title":[],"issued":{"date-parts":[[2026]]},"references-count":0,"URL":"https:\/\/doi.org\/10.2139\/ssrn.6763898","relation":{},"subject":[],"published":{"date-parts":[[2026]]},"subtype":"preprint"}}