الكلية: كلية الأعمال
الجهة البحثية: جامعة مؤتة
عنوان البحث المنشور:
Trade credit and the speed of leverage adjustment
سنة النشر: 2019
ملخص البحث المنشور:
This study investigates the impact of trade credit on the speed of adjustment (SOA) of short-term leverage. Over-levered firms face higher bankruptcy costs, creating an incentive to use trade credit as a lower-cost substitute, thereby accelerating capital adjustment. Using firm-level data from five countries with differing economic orientations—bank-oriented economies (France, Germany, and Japan) and market-oriented economies (the UK and the USA)—over the period 2000–2017, the study employs two-step GMM to estimate the target short-term leverage ratio and assess the influence of trade credit on the SOA toward this target. The findings indicate a positive effect of a low level of trade credit (high capacity) on the SOA for over-levered firms, aligning with the substitution effect. Over-levered firms leverage trade credit as a cost-effective alternative to bank loans to reduce bankruptcy risks. While the study focuses on publicly traded firms, future research could extend the scope to include non-listed and small firms for broader insights. The practical implications emphasize the importance of recognizing the relationship between trade credit and deviations from target short-term leverage. Firms should consider trade credit as a financing option during periods of high short-term leverage to facilitate adjustments toward their target ratio. To the best of the author’s knowledge, this is the first study to explore the role of trade credit in influencing the SOA of short-term leverage, contributing novel insights to the existing literature.
رابط البحث المنشور:
https://www.emerald.com/insight/content/doi/10.1108/md-04-2019-0530/full/html