This paper studies whether government’s participation in product market, as a customer, affects supplier firms’ stock price crash risk. Using a sample of U.S. firms from 1980 to 2015, we find robust evidence that the presence of major government customers is associated with a lower level of stock price crash risk for supplier firms. Further, we show that government customers can lower suppliers’ crash risk by imposing monitoring activities on suppliers and/or reducing suppliers’ operational risk, leading to a reduction in supplier managers’ bad news hoarding behavior. Overall, our results indicate that government spending, as an important public policy, can significantly affect shareholders’ value by mitigating stock price crash risk.

本文研究了政府作为客户参与产品市场是否会影响供应商的股价崩盘风险。我们使用 1980 年至 2015 年的美国公司样本，发现强有力的证据表明，主要政府客户的存在与供应商公司的股价崩盘风险水平较低有关。此外，我们表明政府客户可以通过对供应商实施监控活动和/或降低供应商的运营风险来降低供应商的崩溃风险，从而减少供应商经理囤积坏消息的行为。总体而言，我们的研究结果表明，政府支出作为一项重要的公共政策，可以通过降低股价崩盘风险来显着影响股东价值。