Trade Credit as a Signal of Quality

41 Pages Posted: 14 Oct 2008

See all articles by Eric de Bodt

Eric de Bodt

NHH-Caltech

Frederic Lobez

University of Lille II - GERME Research Center

Jean-Christophe Statnik

University of Lille II - University of Lille LSMRC & ISA

Date Written: April 2008

Abstract

Trade credit is a major source of financing. Over the past decade, it has represented more than 20% of the total assets of US listed firms. Different arguments have been suggested in the academic literature to explain why there is a strong industry pattern to trade credit usage (including the nature of the firm's assets, the degree of liquidity of the firm's inputs, and the degree of competition among suppliers), but little is known about the factors underlying the variance of trade signal of quality. Our theoretical predictions are empirically verified using a large sample of US firms observed during the 1977-2005 period.

Keywords: trade credit, signaling

Suggested Citation

de Bodt, Eric and Lobez, Frederic and Statnik, Jean-Christophe, Trade Credit as a Signal of Quality (April 2008). AFFI/EUROFIDAI, Paris December 2008 Finance International Meeting AFFI - EUROFIDAI. Available at SSRN: https://ssrn.com/abstract=1282114 or http://dx.doi.org/10.2139/ssrn.1282114

Eric De Bodt

NHH-Caltech ( email )

18B AVENUE BECHET
Kraainem, 1950
Belgium
+32 475 24 01 69 (Phone)

HOME PAGE: http://www.edebodt.eu

Frederic Lobez

University of Lille II - GERME Research Center ( email )

1, Place Deliote BP 381
Lille, 59000
France
03 20 99 74 75 (Phone)
03-20-90-77-02 (Fax)

Jean-Christophe Statnik (Contact Author)

University of Lille II - University of Lille LSMRC & ISA ( email )

1, rue de Mulhouse
Lille, 59000
France

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