Irrelevant answers in customers’ earnings communication conferences and suppliers’ cash holdings

This study examines whether and how the quality of manager-investor interactions in customer firms’ online earnings communication conferences affects supplier firms’ cash holdings. We find that customer management’s irrelevant answers, measuring the lack of documented interaction quality, are positively associated with suppliers’ cash holdings. This association is robust to controlling for standard cash holdings determinants and endogeneity. We also find that the effect of irrelevant answers works through signifying the firm’s adverse future business conditions and prospects. Moreover, this effect is more pronounced when suppliers are non-state-owned, more financially constrained, or in a lower concentration industry.