Trade credit and determinants of profitability in Europe. The case of the agri-food industry

Grau, Alfredo Juan Grau; Reig, Araceli

doi:10.1016/j.ibusrev.2018.02.005

Cited by 35 publications

(33 citation statements)

References 22 publications

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“…Furthermore, prior studies question the difference in the relationship between trade credit and profitability among industries (Dary and James, 2019, Grau and Reig (2018), Mun and Jang (2015)). Grau and Reig (2018) examine this relationship in the European agro-food firms and confirm that the impact of trade credit on profitability depends on firm size. In other words, larger companies will be more profitable if they grant more trade credit investment.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 83%

“…This result also proves the vital role of trade credit as a channel of financing for the life of a business. Recent work of Grau and Reig (2018) has showed an unclear result for the impact trade credit has on firm profitability during the financial crisis in Europe. With the approach of differentiating the policies and customs with respect to the granting of trade credit, the estimated effect has stated depending on country, size, specificity, market power and reputation.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

“…Meanwhile, in the restaurant industry, Mun and Jang (2015) reveals firms' working capital which includes accounts receivable has a significant inverted U-shaped relationship with profitability. The above-mentioned relationship in individual industries have caught much scholar's attention for decades (Dary and James, 2019;Grau and Reig, 2018;Mun and Jang, 2015). However, few researchers have addressed the issue in the manufacturing industry.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

See 2 more Smart Citations

The Impact of Trade Credit Investment on Manufacturing Firms' Profitability: Evidence from Vietnam

Pham¹,

Huynh²

2020

Acta Univ. Agric. Silvic. Mendelianae Brun.

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The aim of this study is to examine the effect that trade credit investment has on firms' profitability. The characteristics of this relationship have not been dealt with in depth for manufacturing firms. We use panel data for a total of 227 Vietnamese publicly listed manufacturing firms for the period 2005–2017. Different econometric estimation techniques such as the feasible generalized least squares, fixed effects and random effects and different calculation of firm performance such as non market-based measure (return on assets) and market-based measure (Tobin's q) are employed to validate the consistent results. The robust results confirm a statistically significant inverted U-shaped relationship between trade credit investment and profitability.

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Section: Literature Review and Hypothesis Developmentmentioning

confidence: 83%

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

See 1 more Smart Citation

The Impact of Trade Credit Investment on Manufacturing Firms' Profitability: Evidence from Vietnam

Pham¹,

Huynh²

2020

Acta Univ. Agric. Silvic. Mendelianae Brun.

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“…Therefore, the consideration of the factors affecting profitability to propose, recommend and find effective and suitable solutions to improve profitability has been mentioned in many research. It is easy to find studies on factors that directly affect profitability such as financial leverage, solvency, liquidity, firm size, capital structure and working capital management (Chamberlain, 1962;DeAngelo & Masulis, 1980;Bradley, Jarrell, & Kim, 1984;Capon, Farley, & Hoenig, 1990;Miao, 2005;Huang & Song, 2006;Aburime, 2009;Anbar & Alper, 2011;Fareed, Ali, Shahzad, Nazir, & Ullah, 2016;Muhammad, Rehman, & Waqas, 2016;Szymańska, 2017;Grau, & Reig, 2018;Blažková, 2018;Yüksel, Mukhtarov, Mammadov, & Özsarı, 2018;Qayyum & Noreen, 2019;Vu, Do, Dang, & Nguyen, 2019;Zheng, Liu, & Huang, 2019;Nguyen & Nguyen, 2020) or external factors influencing profitability such as market concentration, industry growth, import growth, GDP growth, inflation, and profitability. yield and profit on financial markets (Bei & Wijewardana, 2012;Pattitoni, Petracci & Spisni, 2014;Çelik, Bilen, & Bilen, 2016;Jędrzejczak-Gas, 2017;Grau & Reig, 2018;Soukhakian & Khodakarami, 2019).…”

Section: Literature Reviewmentioning

confidence: 99%

Effect of Working Capital Management on the Profitability of Steel Companies on Vietnam Stock Exchanges

PHAM¹,

Nguyễn²,

Nguyen³

2020

JAFEB

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This study examines the influence of working capital management (WCM) factors on the profitability of steel companies listed on the Stock Exchange of Vietnam. Data was collected from audited financial statements of companies for a period of 10 years, from 2010 to 2019. The number of samples eligible for research is 20 out of 26 companies, which is equivalent to 76.9%. With the help of dedicated software Stata version 14, the impact determination of WCM (through 8 independent variables: DIO, DPO, DSO, CCC, SIZ, CR, LEV, GRO) to the firm's profitability (through the dependent variable) is performed through multivariate regression models. Research results from companies in the steel industry in Vietnam during this period indicate that WCM has a strong impact on the profitability of businesses. Among 8 factors affecting the profitability of steel enterprises, factors DPO, DIO, DSO, CR, SIZ, GRO have a positive impact, boosting profitability; 2 factors CCC and LEV have a negative impact on profitability; in which, the effect of CCC is negligible. This conclusion is almost in contrast to many previously published studies due to the specifics of the industry as well as the different stages of economic development associated with the economic management policies of the State.

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“…A special place in the literature on the subject is occupied by the research on the relationship between the use of trade credit and the results of business operations. The research conducted by A. Juan Grau and A. Reig on data from the period of the financial crisis showed that trade credit affected the profitability of an enterprise depending on the country and size, specifics, market power or reputation of the company [21]. Therefore, the level of profitability can be increased by investing in debt [22].…”

Section: Introductionmentioning

confidence: 99%

Trade Credit Management Strategies in SMEs and the COVID-19 Pandemic—A Case of Poland

Zimon

Dankiewicz

2020

Sustainability

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Every large or small enterprise needs to have financial liquidity and to be able to generate profits to develop. It is not important in which sector it operates, whether it is a private or public one, but profits and safety are two elements every enterprise is not able to function without. The low performance of these two measures can cause a number of difficulties for managers. To avoid this, leading companies, especially the smallest ones, should optimize the trade credit management policy. Most often, SMEs’ (small and medium-sized enterprises) owners try to work together as part of a group purchasing organization, which positively affects trade credit management. The aim of the paper is to present the trade credit management strategy in Polish group purchasing organizations during the COVID-19 pandemic. The study uses data on the construction sector because it is one of the most important segments of the Polish economy, which is financed to a large extent with trade credit. The paper indicates the mechanisms whose applications allowed SMEs operating in purchasing groups to change trade credit management strategies in such a way that these units could operate calmly and safely in the market. These changes could be observed in purchasing goods with a large reserve, strictly controlling all receivables, switching to cash sales or limiting sales on long-term trade credit. The analysis showed that enterprises changed trade credit management strategies from moderately conservative to highly conservative.

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Trade credit and determinants of profitability in Europe. The case of the agri-food industry

Cited by 35 publications

References 22 publications

The Impact of Trade Credit Investment on Manufacturing Firms' Profitability: Evidence from Vietnam

The Impact of Trade Credit Investment on Manufacturing Firms' Profitability: Evidence from Vietnam

Effect of Working Capital Management on the Profitability of Steel Companies on Vietnam Stock Exchanges

Trade Credit Management Strategies in SMEs and the COVID-19 Pandemic—A Case of Poland

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