Affiliation:
1. Department of Accounting University of Birmingham Birmingham UK
2. School of Business and Economics, Department of Accounting, Economics and Finance Deree—The American College of Greece Athens Greece
3. School of Business and Economics, Department of Maritime Transport & Logistics Deree—The American College of Greece Athens Greece
Abstract
AbstractThis 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.
Subject
General Economics, Econometrics and Finance,Accounting