Abstract
We investigate how high-ability managers affect trade credit policies of U.S. publicly traded companies from 2003 to 2016. Consistent with the prediction of an “Imbalance of power” in the supply chain, we find that firms with more able managers implement more favorable trade credit policies with both upstream and downstream business partners (i.e., fewer trade credit days in receivables, more trade credit days in payables, and lower net trade credit days), indicating that managerial ability is an important determinant of corporate trade credit. Our cross-sectional analyses provide further support for the bargaining power view of trade credit. The results are robust to various tests mitigating the endogeneity concerns. This study sheds light on the importance of more able managers in working capital and supply chain management.
Description
© 2023 The Author(s). Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/bync-nd/4.0/).
Publisher
Elsevier
Date of publication
2023
Language
english
Persistent identifier
http://hdl.handle.net/10950/4949
Document Type
Article
Recommended Citation
James, Hui Liang; Ngo, Thanh; and Wang, Hongxia, "The impact of more able managers on corporate trade credit" (2023). Accounting, Finance & Business Law Faculty Publications and Presentations. Paper 11.
http://hdl.handle.net/10950/4949