Stock market listing and the use of trade credit: Evidence from public and private firms

Abdulla, Yomna; Dang, Viet Anh; Khurshed, Arif

doi:10.1016/j.jcorpfin.2017.08.004

Cited by 99 publications

(104 citation statements)

References 90 publications

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“…Breza and Liberman (2017), on the other hand, provide evidence that similar restrictions on the maturity of trade credit -such as that which a large buyer in Chile could obtain from small suppliers -lead to a reduction in trade with small firms. Abdulla et al (2017) find that privately held firms rely more on trade credit than do publicly listed companies.…”

Section: Introductionmentioning

confidence: 89%

The differential impact of leverage on the default risk of small and large firms

Cathcart

Dufour

Rossi

et al. 2020

Journal of Corporate Finance

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We analyse a sample of 6 million firm-year observations of large corporations and small and medium sized enterprises (SMEs) spanning 6 European countries from 2005 to 2015, to determine the impact of leverage and different sources of funding on default risk. We find that financial leverage has a greater impact on the probability of default of SMEs than of large corporations. The difference in default probability between the top and bottom leverage quartiles is 1.24% for large firms and 2.87% for SMEs. This difference may be explained by the greater exposure of SMEs to short-term debt and their consequently higher refinancing risk. Indeed, we find that SMEs that recover from the state of insolvency may have similar leverage to defaulted SMEs; however their liability structure is significantly altered towards long-term debt and away from short-term debt. Our findings have important implications not only for bank regulators and policy-makers but also for credit risk modelling.

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Section: Introductionmentioning

confidence: 89%

The differential impact of leverage on the default risk of small and large firms

Cathcart

Dufour

Rossi

et al. 2020

Journal of Corporate Finance

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“…Thus, firms can use trade payables to optimise inventory levels. Suppliers' credit is the main source of inventory financing (Demirgüç-Kunt and Maksimovic 1999) because it is easier to arrange than a bank loan (Abdulla et al 2017). In fact, over 80% of merchandise in the UK is financed by suppliers' credit (Peel et al 2000).…”

Section: Abnormal Inventory and Trade Payablesmentioning

confidence: 99%

Abnormal inventory and performance in manufacturing companies: evidence from the trade credit channel

Afrifa

Alshehabi

Tingbani

et al. 2020

Rev Quant Finan Acc

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This paper examines the value of abnormal inventory and the channels through which firms decrease abnormally high inventory or increase abnormally low inventory for a sample of 976 United Kingdom manufacturing firms over the period from 2006 to 2015. Using GMM regressions, the results show that (i) an optimal inventory policy exists; and (ii) firms that are able to converge at this optimal inventory level by either decreasing abnormally high inventory or increasing abnormally low inventory to improve operational and stock performance. Importantly, the results show that trade receivables and trade payables are the channels through which firms achieve efficient inventory management.

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“…The research of J. Murfin, Njoroge [10] proved that investment-grade buyers will obtain loans from smaller suppliers and force suppliers to reduce investment, which is more obvious during the credit crunch period; Jean. NoelBarrot [11] found out that providing restrictions on trade credit can greatly reduce the risk of corporate reporting violations by studied reforms in the French transportation industry; Based on the research on equity capital market and trade credit financing conducted by Yomna Abdulla et al [12], the scholar Chenguang Shang [13] demonstrated that companies with high stock liquidity rely less on commercial credit financing by measuring stock liquidity and trade credit measures, this relationship is more significant for companies that are constrained by financing and rely on short-term debt.…”

Section: The Complementary Relationship Between Commercial Credit and Bank Creditmentioning

confidence: 99%

How Does Competitive Strategy Influence the Complementary Between Trade Credit and Bank Credit

Chang¹,

L²,

Tan³

2020

dtssehs

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As the main sources of financing, the optimal allocation between trade credit and bank lines of credit is crucial for the long-term development of enterprises. Based on Chinese A-share listed companies from 2000 to 2017, this paper examines the complementary relationship between trade credit and bank credit. Furthermore, comparing with cost leadership strategy, higher degree of differentiation strategy can enhance the bargaining power of suppliers by differentiated products and diversifying risks, so as to strength the complementary relationship between trade credit and bank credit. By employing a new method of natural language processing and deep learning to identify firm strategy from textual annual financial report, this article enriches the research of trade credit and bank credit, and is instructive for companies to make reasonable financing decisions based on their strategic characteristics.

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Stock market listing and the use of trade credit: Evidence from public and private firms

Cited by 99 publications

References 90 publications

The differential impact of leverage on the default risk of small and large firms

The differential impact of leverage on the default risk of small and large firms

Abnormal inventory and performance in manufacturing companies: evidence from the trade credit channel

How Does Competitive Strategy Influence the Complementary Between Trade Credit and Bank Credit

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