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This article is the first to study the relation between financial restatements and restatement firms' demand for trade credit as a source of financing. Using a sample of U.S.-listed firms for the 2000–2016 period, we find that restatement firms tend to use more trade credit in the year following the restatement disclosure year than do non-restatement firms. Moreover, we find evidence that restatement firms use trade credit to substitute for the reduced reliance on short- and long-term loans. Our further analysis reveals that restatement firms can obtain more trade credit when the firms promptly change the CEOs as a signal for firms' attempt to repair damaged organizational legitimacy. Taken together, our findings suggest that restatement firms experiencing difficulties in obtaining conventional borrowings tend to resort to trade credit as an alternative source of financing. [ABSTRACT FROM AUTHOR]

In this paper, we examine a supply chain consisting of a supplier with capital constraint and multiple retailers with no working capital. The retailers can get either trade credit from the supplier or loan from banks. All the retailers are differentiated by their credit scores, which measure the possibility that they default. We show that when the retailer's default probability is high compared with the marginal cost, the retailer cannot get financial support. If the retailers only get money from banks, the more reliable a retailer is, the higher the wholesale price the supplier may charge him. We also find out that the supplier has the motivation to provide trade credit even when the retailers can get money from banks. And no matter where the retailers get money from, when the initial capital is a little insufficient, the supplier will reduce the quantity of the products provided to all retailers. As the initial capital becomes less, the supplier will cut off all the supply to the lowest-score retailer first no matter whether the supplier undertakes the default risk or not. In other words, when the retailers are heterogeneous, for supplier, it is not always the more retailers, the better. [ABSTRACT FROM AUTHOR]

In recent years supply chain finance plays an important role to enable capital constrained firms secure financing for sustainable operation, especially for small and medium sized enterprises. This paper constructs a Stackelberg model to explore the interaction effect between financing schemes and after-sales service schemes in a supply chain, including a capital-constrained retailer and a well-funded manufacturer. We characterize the optimal decisions for each of the four combinations of two financing schemes and two after-sales service schemes. The results show that the decisions of order quantity and after-sales service level are influenced by the initial capital of the retailer. The retailer on whether to use bank credit, trade credit or both is jointly determined by demand distribution, the initial capital of the retailer, the trade credit interest rate of the manufacturer. Under the same after-sales service scheme, the equilibrium financing scheme is affected by the coefficient of credit guarantee and the initial capital. Furthermore, the results show that the capital constraint could affect who will provide the after-sales service when the shortage of fund brings additional costs. [ABSTRACT FROM AUTHOR]

This study explores the moderating role of trade credit in the value-creation process of firms. Through panel data analysis of annual data from publicly listed firms in ten developing Asian economies, we found that both investing in capacity expansion and engaging in trade credit activity positively impact the value creation process. However, the combination of capacity expansion and trade credit leads to enhanced value creation. The findings highlight the roles played by both borrowed and supplied trade credit in this process. By examining the role of trade credit as a catalyst between corporate investment and value creation, this study provides valuable insights for policymakers and practitioners. The results suggest that firms in these economies should consider increasing their trade finance activity to achieve higher value through capacity expansion. To ensure the validity of the findings, the study conducts a series of robustness checks, including alternative regression specifications, different measures of the key variables, and diverse sample compositions. [ABSTRACT FROM AUTHOR]

We examine whether managerial ability affects the relationship between corporate digital transformation and trade credit. To measure digital transformation, we perform a textual analysis of companies' annual reports using a customized Chinese dictionary containing digital transformation keywords based on national policy documents and academic literature. Using 10,554 observations from 2509 A‐shares listed companies in China, we show that corporate digital transformation has significantly impacted trade credit. Managerial ability enhances the relationship between digital transformation and received trade credit but does not change the impact between digital transformation and provided trade credit. A battery of robustness tests confirms the findings. [ABSTRACT FROM AUTHOR]

We focus on analyzing the risk preferences of suppliers regarding two types of financing: partial credit guarantee (PCG) and trade credit financing (TCF). Using the conditional value-at-risk (CVaR) criterion, we study each supply chain member's equilibrium solution and optimal financing strategy under the assumption of demand distributions with an increasing failure rate. Initially, we present an analytical solution of the risk-averse supplier's wholesale price, and prove that the optimal wholesale price decreases in the risk-averse level and initial capital, and increases in the credit guarantee ratio. Furthermore, we derive optimal financing strategies for both the supplier and the retailer under various circumstances. However, it is important to note that the results reveal a potential trade-off associated with PCG. While risk-averse suppliers may be more inclined to provide PCG compared to risk-neutral suppliers, this financing option can negatively impact the supplier's utility and the expected profits of the retailers. Finally, we illustrate how the optimal financing strategies shift in response to changes in the risk-averse level and credit guarantee ratio, and present the win-win situations for the supplier and the retailer. [ABSTRACT FROM AUTHOR]

Customer geographical proximity is a factor influencing supplier firms' trade-offs when granting customers trade credits. However, the extant literature offers scant empirical evidence on the effect of customer location on supplier firm's trade credit. This paper investigates the impact of major customers' geographical proximity on a supplier firm's trade credit. Using a sample of 5,587 observations of publicly listed Chinese firms between 2007 and 2017, we document a positive relationship between major customers' geographical distance and the supplier firm's trade credit. Moreover, the main results remain robust when changing samples and considering endogeneity problems. This paper also tests two potential channels and identifies the exploring market channel that exists in our sample. Furthermore, the main relation is more pronounced in supplier firms with low financial risk, operating in areas of high marketization, high product development, strong legal environments, and low economic policy uncertainty. This paper extends the existing literature on the economic consequences of customer characteristics on supplier firms to include customer geographic proximity. In addition, this paper sheds light on supply chain risk management. [ABSTRACT FROM AUTHOR]

The commercial bill, as a regulated commercial credit mode, offers better creditor protection, more financing channels, and stronger bargaining power in financing. This paper creatively constructs bills receivable index in the micro level of enterprises and examines the potential impact of billing of accounts receivable on the financing constraints faced by enterprises. This paper also explores the mechanism that causes the impact and check whether the establishment of the Shanghai Commercial Paper Exchange Corporation (SHCPE) has had positive effects. The results show that billing can alleviate the financing constraints of enterprises due to its benefits offered by the commercial bill. Furthermore, the establishment of the Shanghai Commercial Paper Exchange Corporation (SHCPE) can lead to the development of a standardized and transparent bill market, further alleviating the financing constraints. The study also reveals that billing of accounts receivable affects financing constraints mainly by enhancing the quality of debt-like assets and reducing information asymmetry between enterprises and the outside world. For enterprises with longer maturity structure, the effect of billing on the alleviation of financing constraints is more significant. [ABSTRACT FROM AUTHOR]

This study explores the impact of being "green" as a response to variability in the business environment. We examine the financial resilience of green Small and Medium-sized Enterprises (SMEs) in Italy compared to non-green during the COVID-19 pandemic. We verify whether green SMEs are more able to attract external funding than non-green and whether green SMEs rely more heavily on trade credit than non-green ones. We carry out an analysis with 215,564 observations, of which 6844 refer to "green" firms, over the period 2017–2020 and we find that before and during the pandemic, Italian green SMEs do not attract more external funding than other SMEs, but they rely more on trade credit than non-green SMEs. Our results partially confirm the traditional substitution effect, and we suggest that the reasons for this relationship are also supplied in the literature which sees trade credit as a component of a long-term portfolio management strategy, i.e., as a tool for consolidating relationships with clients, for price discrimination and/or for increasing firm profitability in facing variable demand conditions. Our paper contributes to the literature in two ways. First, it investigates the relationship between the "green" characteristics of a firm and its level of economic and financial resilience during the pandemic. Second, it verifies whether, during a complex economic shock, green orientation increases or decreases the importance of trade credit relative to bank credit in financing the firm. [ABSTRACT FROM AUTHOR]

Millions of mom‐and‐pop nanostores dominate the grocery retail landscape in emerging markets. As nanostores are cash and storage space constrained, their suppliers tend to visit them with a high frequency, causing high operational costs. It is unclear if credit could mitigate such costs by allowing for a lower visit frequency. To investigate this, we conduct a randomized field experiment on nanostores that have not made recent use of supplier credit, with the objective to uncover how trade credits interact with the visit frequency and with the available storage space to shape shopkeepers' ordering behavior. We find that trade credits moderate the positive relationship between visit frequency and bi‐weekly order size, with credit effects being salient under low frequency visits. Storage space, by contrast, does not directionally shape shopkeepers' ordering behavior. While trade credits may more than offset the negative effect of low frequency visits among adopting nanostores, credit adoption remains challenging, with only 24% of nanostores assigned to the credit condition actually adopting the credit. Remarkably, not a single credit line was defaulted over the entire duration of the intervention. In terms of assortment, trade credit is mostly used to acquire nanostores' core assortment of popular, low‐price items with low physical volume. We contribute to the extant literature by showing that the gesture by the supplier to extend trade credit may only partly legitimize a reduction of the visit frequency. Highlights: Nanostore suppliers can anticipate difficulties financing their way out of high frequency visits at scale, regardless of nanostores' available storage space.Providing trade credits may justify a lower visit frequency for nanostores that are willing to transact with trade credits, when geographic expansion is possible at a reduced cost or when operational costs are high.Shopkeepers' exhibit a conservative ordering behavior, leveraging order financing to acquire their core assortment of popular, low‐price items with low physical volume. [ABSTRACT FROM AUTHOR]

This study investigates the effects of cross- and stable shareholdings on the relationship between accounting quality and trade credit in Japan. Cross- and stable shareholdings are well-known features of Japanese corporate governance, as a private information-sharing system. The results indicate that the trade credit of customers without either cross- or stable shareholdings increases with accounting quality, and in most cases, such shareholdings weaken the relationship between accounting quality and trade credit. These findings suggest that close ties to cross- and stable shareholders reduce the importance of accounting information through sharing private information. The findings will enhance the understanding of ownership structure's potential impact. Overall, this study contributes to the literature by demonstrating the role of accounting quality in financing and the factors that reduce this role. In addition, this study highlights policy implications for the regulatory initiatives to unwind cross-shareholdings, which may affect private information sharing. Data Availability: Data are available from sources indicated in the text. JEL Classifications: G34; M41. [ABSTRACT FROM AUTHOR]

We investigate the effect of affiliation with a large business group on a firm's trade credit policy while controlling for the effects of its financial health and bargaining power in the Korean setting. Group affiliation may influence trade credit finance through the internal capital market mechanism and/or the extra bargaining power mechanism. In our empirical analyses, we focus on identifying the more dominant mechanism for determining trade credit demand (TCD) and supply (TCS). First, we provide a set of empirical findings showing that a firm's affiliation with a large business group increases the firm's TCD but decreases its TCS. These findings support the extra bargaining power mechanism argument. Second, we provide another set of empirical findings that group‐wise financial distress has weak positive impacts on a group affiliate's TCD and TCS. These findings support the internal capital market mechanism argument. Overall, we provide evidence that large business groups in Korea function uniquely in that the extra bargaining power mechanism greatly dominates the internal capital market mechanism when determining a group affiliate's trade credit transactions. We also provide evidence of the internal capital market mechanism functioning when an entire business group faces severe financial difficulties. [ABSTRACT FROM AUTHOR]

Understanding the factors influencing professionals' commitment to suppliers when acquiring pesticide products is crucial in urban pest management. The study assesses how price, quality, trade credit, and supplier relationships impact commitment to purchasing pesticides. Employing partial least squares structural equation modelling, the study's findings indicate that when urban pest management professionals decide on pesticide purchases, their decisions are notably influenced by product price, the availability of trade credit, and product quality. Surprisingly, a positive relationship with suppliers does not influence their commitment to purchasing pesticides. This study discusses the variations and offers implications for managers in the Philippines.

This article studies the accounting and analysis of accounts receivable, particularly trade credit, as a key financial management tool within the global competitive environment. The authors explore theoretical and practical aspects of managing accounts receivable and methods to assess its impact on financial stability. Emphasis is placed on the theoretical justification for non-standard practices in accounting and analyzing trade credit as a separate asset, aiding in better risk identification of bad debts that affect enterprise viability. The study highlights that accounting entries for income registration result in constant receivables within assets, necessitating proper management strategies. Customer receivables, often from trade credit, require a dedicated debt management and collection policy to minimize operational risks. The authors point out that national and international accounting standards do not classify trade credit as a separate asset, complicating financial risk management and analysis. Effective management methods, including data collection on customer creditworthiness, are critical for financial stability. The article underscores the importance of systematizing empirical studies to support theoretical development in accounting and analyzing accounts receivable. Effective trade credit management is vital for enterprise competitiveness. The study employs dialectical and deductive approaches to draw logical conclusions on the relationship between receivable management and financial stability. The authors review Ukrainian and international legislation to identify legal aspects of receivables management. A high proportion of bills of exchange in receivables indicates customer credit risk, necessitating an effective credit policy. Recommendations include analyzing customer creditworthiness and using modern financial risk assessment methods. This article proposes approaches to accounting and analyzing accounts receivable, enhancing the scientific theory of financial management and improving the application of theoretical knowledge in modern economic management.

This paper explores the impact of firms’ ESG performance on their trade credit financing and working capital efficiency, utilizing a sample of 586 Indian firms listed on the National Stock Exchange (NSE) from 2015 to 2022. The study offers robust evidence supporting the positive connection between superior ESG disclosure and trade credit, as well as the negative link between ESG disclosure and the cash conversion cycle. These findings underscore the role of ESG disclosure in increasing suppliers’ willingness to extend trade credit and facilitating efficient working capital management practices. The result shows that improved ESG disclosure practices increase payable turnover days and reduce both inventory turnover and receivable turnover days, reflecting the enhanced operational efficiency and market power of the firm.

Agriculture is crucial for the economy and individuals, and there is a pressing need to improve its quality, efficiency, and competitiveness in emerging countries. This study uses data from Chinese-listed companies to investigate the effect of trade credit on agricultural firms' total factor productivity. The results demonstrate that trade credit access and provision can increase agribusinesses' total factor productivity. Heterogeneity analysis reveals that access to business credit has a higher contribution to total factor productivity for agribusinesses in the primary sector, for firms in the versus maturity stage, and with low or medium supplier concentration. The provision of trade credit has a more pronounced positive impact on agribusinesses in the maturing stage and enterprises with low or medium customer concentration. This paper further validates the channels of action through which trade credit affects a firm's highquality development. This research makes a valuable contribution to enhancing the quality and productivity of China's agricultural sector. [ABSTRACT FROM AUTHOR]

There can be various causes of demand disruption like pandemic outbreaks, war situations, natural calamities, customer preference change, etc. Recently, the world witnessed one of the biggest disruptive events: the COVID-19 pandemic. Many times, when things seemed to be returning to normal, a new wave of pandemic arrived. Another disruptive event appeared in the form of Russia Ukraine war. As people avoid going out of their homes during such events, demand for a product is likely to go down. During the COVID-19 lockdown, demand for a normal product also vanished due to stringent rules imposed by the government. The novelty of the present work lies in collaborations of realistic aspects like demand disruption, both sudden fall and rise, time-dependent demand, stochastic two-parameter Weibull distribution deterioration rate, trade credit financing, and partial backlogged demand during stock out condition and also the validation of the model with real data sets in a two-warehouse inventory system, i.e., distributor possesses two warehouses one is owned by the distributor is called as an owned warehouse (OW) and another warehouse is hired on rent by the distributor called as a rented warehouse (RW). According to the author's knowledge, this work has not been completed previously. The proposed work determines an optimum lot size and optimum backlogged quantity to maximize profit under such a disruptive environment. According to the duration of the disruption, two distinct scenarios are developed to illustrate the impact of disruption duration on total average profit. The model is validated with numerical examples, and concavity is illustrated graphically. To derive critical theoretical managerial implications, a sensitivity analysis is conducted with respect to significant parameters. This study ends with a conclusion, followed by a discussion of the limitations of the current study and the potential directions for future research. [ABSTRACT FROM AUTHOR]

This paper investigates the factors and effects of trade credit, as an alternative source of capital, by employing a generalized method of moments instrumenting for endogeneity based on a panel data set of public maritime shipping companies and compatible companies in other industries. Our study shows that the magnitude of trade credit is affected by profitability, financial leverage, company size, cost of capital, financial distress, institutional ownership, corporate power, corporate liquidity, asset intensity, and corporate growth. It also suggests that trade credit affects financial performance, equity value, and risk. These empirical findings yield important implications for principal financial officers, as discussed herein. [ABSTRACT FROM AUTHOR]

We investigate the impact of information search costs on firms' access to trade credit used as a major source of interfirm financing. Using the openings of high-speed rails (HSR) in China as exogenous shocks, we find that firms located in cities with HSR connections receive more trade credit from their suppliers. Further analyses show that the HSR effect on trade credit concentrates among customers with poor information transparency and that HSR openings improve the customers' information environment, suggesting that a decline in information search costs promotes supplier financing. Our finding reveals a positive externality of HSR construction on interfirm financing. [ABSTRACT FROM AUTHOR]

This study investigates the consequences of bank mergers on non-financial borrowers' working capital management. We find evidence that bank mergers increase corporate cash holdings and decrease receivables and investments in inventories by reducing bank credit availability. Bank mergers also decrease trade credit used through the reduction in bank credit availability. These findings are new contributions to the literature, suggesting that borrowing firms find it more difficult to manage working capital after bank mergers occur and that bank-dependent firms find it more difficult to manage working capital than their non-dependent counterparts after mergers. [ABSTRACT FROM AUTHOR]

This paper investigates the effects of trade credit on export survival by using cross-country panel data with 41 countries from 1997 to 2014. The export survival rate is the ratio of the number of survivors to the entrants. Trade credit is defined as the net value received of the liabilities and claims arising from receiving or providing supplier credit and advance payment for transactions in goods and services. The empirical results indicate that net trade credit received by the exporters is positively associated with the possibility of export survival and that this effect is notably stronger for second- and third-year firms than for first-year entrants, for crisis and post-crisis periods compared with normal periods, and for cases where endogeneity problem is taken into account. These findings suggest that in order to enhance the sustainability of export flow, governments should employ policies to facilitate greater advance payment, especially during periods of financial distress. [ABSTRACT FROM AUTHOR]

We exploit the introduction of the Payment Practices Disclosure Regulation in the United Kingdom (UK) to examine the effects of mandating disclosure of customer‐supplier payment practices. We find that nondisclosing small and medium‐sized enterprises (SMEs) experience a reduction in their accounts receivable by 8.3%, consistent with an acceleration of their trade credit collections. Further, SMEs exhibit fewer financial constraints after the regulation. We survey managers from large firms and SMEs to understand the underlying mechanisms. The required disclosures raise large firms' reputational concerns and shift the bargaining power between large firms and SMEs. Additionally, the new disclosures compel executives at large firms to scrutinize their own firms' payment practices, leading to increased accountability and a stronger focus on timely payment among senior managers. [ABSTRACT FROM AUTHOR]

This article studies the accounting and analysis of accounts receivable, particularly trade credit, as a key financial management tool within the global competitive environment. The authors explore theoretical and practical aspects of managing accounts receivable and methods to assess its impact on financial stability. Emphasis is placed on the theoretical justification for non-standard practices in accounting and analyzing trade credit as a separate asset, aiding in better risk identification of bad debts that affect enterprise viability. The study highlights that accounting entries for income registration result in constant receivables within assets, necessitating proper management strategies. Customer receivables, often from trade credit, require a dedicated debt management and collection policy to minimize operational risks. The authors point out that national and international accounting standards do not classify trade credit as a separate asset, complicating financial risk management and analysis. Effective management methods, including data collection on customer creditworthiness, are critical for financial stability. The article underscores the importance of systematizing empirical studies to support theoretical development in accounting and analyzing accounts receivable. Effective trade credit management is vital for enterprise competitiveness. The study employs dialectical and deductive approaches to draw logical conclusions on the relationship between receivable management and financial stability. The authors review Ukrainian and international legislation to identify legal aspects of receivables management. A high proportion of bills of exchange in receivables indicates customer credit risk, necessitating an effective credit policy. Recommendations include analyzing customer creditworthiness and using modern financial risk assessment methods. This article proposes approaches to accounting and analyzing accounts receivable, enhancing the scientific theory of financial management and improving the application of theoretical knowledge in modern economic management. [ABSTRACT FROM AUTHOR]

This paper investigates the impacts of preferential credit policy, faced by capital constraint retailers, on coordinating the supply chain. Apart from different bank's and manufacturer's risk preferences, preferential credit is also affected by the retailers' exogenous collateral. We establish the preferential credit coordinating model (PCCM) to examine the optimal decisions and coordinate the supply chain with different financing channels, such as the preferential bank loan, preferential trade credit and portfolio credit. In this paper, we conclude some critical findings. Firstly, we find that the retailer's optimal would improve its optimal order quantity in the coordinated supply chain when he finances from a risk-pursuing bank or the manufacturer. Secondly, the retailer's financial cost would be shared with the manufacturer whether the retailer utilises preferential trade credit or bank financing channel. Thirdly, the capital constraint retailer would prefer preferential trade credit to the other financing methods for the purpose that the preferential trade credit could improve the coordinated supply chain's efficiency. Finally, we capture different impacts of collateral and risk preference on the supply chain. This article supplements the existing literature on supply chain finance with a preferential credit insight into the condition of the coordinated supply chain. [ABSTRACT FROM AUTHOR]

The boom in online sales has inspired the enthusiasm of manufacturers to include their own online sale channel with the retailer's offline channel. This paper investigates the impact of consumer transfer in a capital-constraint dual-channel supply chain and examines the optimal operational decision by considering a Stackelberg game. We capture the trade credit coordination mechanism of the supply chain facing with stochastic demand. The results show that trade credit contract would alleviate financial pressure of the capital-constraint retailer and achieve coordination in the dual-channel supply chain. Besides, the adoption of trade credit stimulates the ordering behaviour of retailers. However, by using trade credit, the default risk increases for the capital-constraint retailer compared to the retailer with sufficient capital. The manufacturer shares the risk with the retailer by trade credit in dual-channel supply chain. Furthermore, the effects of consumer transfer rates on the setting of the trade credit parameters are also presented in this paper. [ABSTRACT FROM AUTHOR]

Digital finance is reshaping trade credit. This study investigates the influence of digital finance on trade credit among A-share listed companies in China from 2011 to 2020. The paper matches this data with city-level digital finance index (DFI) data. Empirical results indicate that digital finance significantly benefits trade credit. This impact occurs through bank competition, regulatory penalties, and disclosure quality channels. Different levels of digital finance development and financing constraints of companies have a varying impact on trade credit. This paper provides a new perspective on trade credit in the firm's supply chain that enriches theoretical research on digital finance. The research results can help the country to implement digital finance development strategy better and offer relevant guidance and reference. [ABSTRACT FROM AUTHOR]

In this paper, we revisit the inventory models featuring two trade credit policies as originally proposed by Hsieh, Chang, Dye, and Weng in their work published in the International Journal of Information and Management Sciences (2009, Vol. 20, pp. 191-204). Our analysis focuses on the computation of interest earned within these models, revealing certain questionable outcomes. Subsequently, we offer a revised perspective aimed at addressing the identified issues, thereby contributing to the enhancement of their significant contributions in the field. [ABSTRACT FROM AUTHOR]

This study examines two retailer-initiated pre-shipment financing programs to assist capital-constrained suppliers in securing external funds for production. The first program is retailer-sponsored financing (RSF), an emerging practice in developing economies. Under RSF, the retailer commits to sharing the loan repayment obligation with the supplier by agreeing to pay up to a specific portion of the supplier's bank loan repayment. The second program is advance payment (AP), a common payment arrangement wherein the retailer pays a part of the wholesale amount upfront to support the supplier's production costs. We analyze a supply chain comprising a supplier and retailer. The retailer must choose between offering RSF, AP, or neither. Without RSF or AP, the supplier must opt for bank-direct financing when it is short of funds and bear the full responsibility of repaying the loan principal and interest. Our findings reveal a divergence in supplier and retailer preferences. Specifically, the supplier favors RSF as it not only lowers the marginal production cost but also permits the supplier to charge a higher risk premium to the retailer compared to AP. Conversely, the retailer prefers AP primarily due to the latter reason. Our research underscores the significance of RSF as a distinct financing alternative, enabling retailers to aid a supplier segment that cannot rely solely on AP. RSF also proves to be advantageous for banks by expanding their supplier clientele and boosting their lending volume. Interestingly, the supplier's and retailer's bankruptcy risks tend to have opposite impacts on the value of RSF. [ABSTRACT FROM AUTHOR]

This paper focuses on financing schemes for a supply chain with high salvage values of unsold products. Combining the buyback contract with a partial credit guarantee (PCG) contract and trade credit (TC) contract, we propose two financing schemes, PCG-Buyback and TC-Buyback, to provide flexible financing services for a capital-constrained retailer and obtain equilibrium strategies of each supply chain member. Furthermore, for PCG-Buyback, this paper obtains a Pareto coordination frontier consisting of the credit guarantee coefficient and the buyback price at different initial capital levels, which is more flexible to achieve supply chain coordination. Finally, we analyze the manufacturer's strategic choices of PCG-Buyback and TC-Buyback in terms of credit guarantee coefficient, buyback price, and financing rate. Our results show that PCG-Buyback is the optimal financing scheme for the manufacturer when both the credit guarantee coefficient and buyback price (or financing rate) are low; otherwise, TC-Buyback is the dominant strategy. This study explores how the risk-sharing mechanism combination of PCG and buyback contracts can provide a more flexible approach to supply chain coordination. Additionally, it highlights the significance of the manufacturer selecting a better financing scheme based on its individual characteristics. [ABSTRACT FROM AUTHOR]

Using executives' decision horizon as a measure of internal governance, this study examines the association between customer's internal governance and supplier's extension of trade credit. Suppliers may extend more trade credit to customers with strong internal governance because of their lower operational risk, higher firm performance, and better information environment. However, firms with better internal governance may have easier access to other sources of financing, and thus may need less trade credit. Using a sample of US listed firms between 1992 and 2021, we find that suppliers extend more trade credit to customers with strong internal governance. We also find that the association between internal governance and trade credit is more pronounced for financially, and informationally constrained firms. Our results are robust to alternative measures and specifications. Incremental to prior studies, we show that effectiveness of customers' internal governance affects suppliers' lending decisions. [ABSTRACT FROM AUTHOR]

This paper examines whether and how capital age influences trade credit extended by suppliers. We find that firms with older capital are associated with a reduction in trade credit offered by suppliers, which is consistent with the view that vintage capital, with outdated technology, is detrimental to firms. Employee outside opportunity, labour mobility and organisational capital are important factors that moderate the association between capital age on trade credit. Our findings are not driven by specific industry sectors or periods and remain robust to alternative measures of trade credit and to endogeneity concerns. In addition, we show evidence that shareholders view vintage capital as value‐destructive. In sum, this study reveals that risk exposure associated with capital age matters for corporate trade credit decisions. [ABSTRACT FROM AUTHOR]

Credit from suppliers is an important source of finance for firms. It can sustain firms' financial flexibility even in periods of downturn. In this study, using a large database of 90,763 Italian firms in the 2015–2021 period, we investigated how local financial development affects the trade-credit policies of SMEs and how this effect is conditioned by the degree of judicial enforcement. Given that trade credit can be a substitute for bank financing, we find that firms make more use of trade credit in developed financial markets. Moreover, we highlight the finding that a higher degree of judicial enforcement, which reinforces the role of contracts in the market, amplifies this effect. Finally, we observe that the COVID-19 crisis has reduced both the positive effect of local financial development and the positive moderating effect of enforcement in the use of trade credit. [ABSTRACT FROM AUTHOR]

Developing industrial linkages as spatial binding forces has become crucial for improving firms' productivity. This paper examines the impacts of the adoption of forward and financial linkages on the vertical integration and performance of textile and garment firms in Egypt. This study uses a sample of 1020 micro-, small-, and medium-sized enterprises, employing propensity score matching to mitigate the endogeneity bias caused by the self-selection problem in adopting industrial linkages. Inverse-probability-weighted regression adjustment is applied as a doubly robust estimator to quantify the impact. The results confirm the positive impact of forward linkage on total factor productivity (TFP). We also found that financial linkage positively affects labor productivity, TFP, and vertical integration, while its impact on exports was marginal. Adopting financial linkage can increase the value-added per labor by 11–13 thousand Egyptian pounds and increase vertical integration by 13 percentage points. Industrial linkages have not realized an impact on exports in the current market structure; however, extending financial linkage works as an alternative to mitigating financial constraints. We underscore the significance of the policy that fosters forward and financial linkages to induce vertical integration and productivity growth. [ABSTRACT FROM AUTHOR]

The research is based on data for 43 non-financial enterprises listed on the Bulgarian Stock Exchange for the period 2018-2022. The results show a statistically significant positive relationship between the indicators of the trade credit policy and the term structure of the enterprises' debt in most years of the studied period. An indicator of the maturity structure of the debt in the study is the ratio Short-term debt/Total debt, and indicators of the trade credit policy of companies are the amount of receivables from customers and suppliers, the ratio Receivables from customers and suppliers/Short-term assets and the ratio Receivables from customers and suppliers/Total assets. This positive relationship is in accordance with the hypothesis of matching the maturities of the liabilities and the assets financed with them and reflects the desire of the companies to hedge the risk and reduce their costs on the borrowed resource. It is established that only in the first year of the Covid-19 pandemic in Bulgaria, there is no significant relationship between the trade credit policy and the maturity structure of the debt of public companies. The reasons for this are the sharp and unexpected deterioration of business conditions in the sectors affected by the pandemic, the strong increase in uncertainty, the disruption of supply chains and difficulties in accessing finance. [ABSTRACT FROM AUTHOR]

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We demonstrate that, in China, firm investment efficiency gains are associated with the use of short‐term debt, especially its trade credit component. During the 2009–2010 economic stimulus plan, such effects were heightened and generally remained persistent in the 2011–2013 poststimulus period. Our findings support the view that the rollover pressure of short‐maturity debt and the information advantage of supply chain financing are both effective mechanisms for enhancing firm governance in an environment more susceptible to financial market incompleteness. Consequently, the enormous credit boost during the stimulus plan was more efficiently invested when channelled through firms' supply chains. [ABSTRACT FROM AUTHOR]

In the present unstable business environment, supply chains are considerably impacted by disruptions, necessitating the implementation of resilience strategies. These strategies, however, pose significant financial challenges for companies. Therefore, financing is essential in developing resilient supply chain networks. In addition to utilizing existing capital, options such as bank loans and trade credit can be employed to alleviate the financial burden and enhance working capital. The present scholarship has failed to address the issue of financial strain resulting from the adoption of resilience strategies. Additionally, the significance of trade credit and repayment scheduling in all levels of the supply chain network also left under-researched. To fill this research gap, this paper proposes a three-tiered supply chain network consisting of main/support suppliers, factories, and distribution centers under uncertain demand conditions. The network is developed to effectively handle demand uncertainty and achieve optimal net present value and demand estimation. To solve the bi-objective model of the study, a preemptive fuzzy ideal programming approach accompanied by the implementation of the CPLEX solver is utilized. The findings lend support to the importance of securing financial support for support suppliers and establishing effective trade credit agreements across all levels of the supply chain. [ABSTRACT FROM AUTHOR]

While the underlying causal linkage between trade credit and corporate growth has mainly been explored, the primary factors that channel the relationship are limited. This article hypothesises a nonlinear relationship between trade credit and corporate growth due to the existing theoretical arguments on the benefit and cost of using suppliers' credit by corporations to enhance growth. Based on a panel of 23,023 non‐financial companies from the United Kingdom over a 10‐year period, evidence from this study reveals a nonlinear (concave) relation between trade credit and corporate growth: positive for low trade credit received and negative for high credit received. We also find trade credit to be sensitive to financial crisis, financial constraints and growth strategy. The predictability is stronger during a financial crisis, among financially constrained corporations and corporations pursuing an aggressive growth strategy. We also find growth to be higher in firms that move closer to achieving an optimal credit level. This relationship holds for both the above‐ and below‐optimal deviations. These findings have implications for a more balanced and nuanced view of trade credit management. [ABSTRACT FROM AUTHOR]