This thesis addresses two fundamental puzzles about trade credit: why does it appear to be so expensive. and why do input suppliers engage in the business of lending money. Both questions are answered analysing the interaction between the financial and the industrial aspects of the supplier-customer relationship. In the first part of the thesis we present a model where, in a context of limited enforceability of contracts, suppliers have a comparative advantage over banks in lending to their customers because they hold the extra threat of stopping the sup-ply of intermediate goods. Suppliers also act as lenders of last resort, providing insurance against liquidity shocks that may endanger the survival of their cus-tomers. The relatively high implicit interest rates of trade credit result from the existence of default and insurance premiums. The two necessary elements for these two roles of suppliers are the existence of some relationship surplus that is split between suppliers and customers, and an environment where debt repayment is difficult to enforce. Then we extend the analysis to suppliers who are themselves financially con-strained. Under certain assumptions, the optimal financial contract that arises is similar to a standard factoring contract. The interest rates paid by suppliers and customers in this contract depend on their own creditworthiness, but also on the characteristics of their commercial relationship. Finally the implications of the basic model are examined empirically using both parametric and non-parametric techniques on a panel of UK firms. The results show some regularities that had not been identified in previous literature and that support the role of suppliers as debt collectors and insurance providers of the basic model. In particular these results are consistent with the idea of trade credit being related to the existence of either some degree of technological specificity or a relationship surplus that takes time to build. Evidence is also found of the support of suppliers to their customers experiencing some form of liquidity shock.

本研究探討企業間商業授信(Trade Credit)在總體貨幣政策變化時所扮演的角色，並參考Choi and Kim (2005)分別觀察應收帳款、應付帳款及淨應收帳款之變化，探討當總體貨幣政策變化時財務較佳企業是否會對財務受限制企業【規模較小、利息保障倍數較低、短期債務相對營收比重偏高、財務槓桿偏高】提供財務協助。 本研究實證結果發現，貨幣政策變化確實造成同業間增加商業授信比率；惟由淨應收帳款比率之變化發現，財務指標較佳企業之淨應收帳款比率對總體貨幣政策之敏感度皆低，亦即對財務不佳企業之財務協助不存在，反觀財務受限制企業在貨幣政策變化時期應付帳款被明顯調降，但仍需增加應收帳款，故整體而言，反而造成財務受限制企業於貨幣政策變化時期增加提供淨商業授信之結果，此結果以負債比偏高組及利息保障倍數較低組尤其明顯，說明不但財務較佳企業並無對財務受限制企業提供財務協助，財務受限制企業於貨幣政策變化時，尚有增加淨商業授信之歷力，對貨幣政策之敏感度較高。 / The objective of this paper is to analyze the relationship between monetary shock and trade credit. Following Choi and Kim (2005), we look at both sides of firm’s trade credit as well as net trade credit to find out if financial assistance view stands. The following results are obtained: (1) Account receivable of both large and small firms increases with monetary shock, but the result of net trade credit is not the same. We find no evidence that financial assistance view stands in terms of different sized firm. (2) Financial unconstained firms also don’t offer more net trade credit while financial constrained firms are forced to increase more net trade credit due to huge account payable drop. Therefore, monetary shock increase the financial pressure of fincncial constrained firms especially significant in higher net leverage ratio and lower interest cover ratio groups.

Comparability is a central feature of financial reporting systems. Comparability is defined by FASB (2010, 19) as “the qualitative characteristic that enables users to identify and understand similarities in, and differences among, items.” The Accounting Principles Board ranked comparability as one of the most important objectives of financial reporting and Generally Accepted Accounting Principles have underscored the importance of comparability for the past four decades. Using empirical measures of financial statement comparability, studies confirm that comparability plays an important role in analyst following, audit fees, credit risk, acquisition decisions, stock price volatility, the cost of debt, the cost of equity, and cash holdings. This dissertation, investigates the impact of comparability on trade credit, earnings management through classification shifting, and on non-Big4 auditors. Prior studies find that comparable firms enjoy a lower cost of equity capital and a lower cost of debt. They should, therefore, require less trade credit. I also find that comparable smaller and/or financially distressed firms require less trade credit whereas they normally require higher levels of trade credit. The results presented in my first essay support this hypothesis in that comparability and trade credit are significantly negatively associated. The results presented in my second essay show that managers’ earnings management through classification shifting is significantly influenced by the degree of financial statement comparability with other firms. I also find that comparable firms engage in less classification shifting and that the impact of comparability is more pronounced after the passage of the Sarbanes Oxley Act. The results presented in my third essay show that companies audited by non-Big4 auditors are less comparable than the companies audited by Big4 auditors. Non-Big4 auditors are thus less likely to be able to apply the same audit process to multiple clients. I find that this results in greater audit effort, as proxied by higher audit fees, for Non-Big4 firms.

This thesis examines debt maturity and trade credit in public and private firms. It consists of three essays that try to answer the following questions: Does the IPO decision affect the debt maturity structure of a firm? Do private firms use more or less trade credit than public firms? Does the supplier's listing status affect its trade credit provision? The first essay investigates the effect of an initial public offering (IPO) on the evolution of debt maturity structure using a sample of U.S. firms that went public during the period 1998-2011. I find that firms decrease their short-term debt by 19% in the first two years after the IPO and decrease it post-IPO, by about 7% relative to the pre-IPO level. These results continue to hold in a sample of new debt issues, in a difference-in-difference regression of IPO and non-IPO firms, in a treatment regression to account for endogeneity of the IPO decision, and in an instrumental variable regression to control for the joint determination of leverage and debt maturity. Further results show that the decline in short-term debt post-IPO is consistent with the asymmetric information and agency costs of equity theories and inconsistent with the agency costs of debt theory. I also find that the IPO effect on debt maturity was magnified during the recent financial crisis. The second essay explores the use of trade credit by public and private firms using a sample of U.S. firms during the period 1995-2012. Evidence shows that private firms use more trade credit by about 40.4% than public firms. This result is robust to models accounting for sample selection and for the endogeneity associated with a firm's decision to go public. In line with the asymmetric information and credit constraints theories, private firms that are young, have more growth opportunities, and fewer tangible assets rely more on trade credit than their public counterparts. Compared to private firms, public firms are faster in adjusting toward their target trade credit due to their lower adjustment costs. I also find that during the recent financial crisis, public firms increased their reliance on trade credit, while, suppliers granted private firms less trade credit. The third essay examines the supply side of trade credit; more specifically, the impact of a supplier's listing status on its trade credit provision using a sample of U.S. firms during the period 1994-2012. The findings show that public firms provide nearly a quarter more trade credit than their private counterparts. I propose that this is because public firms have higher financial capability, better ability in handling the trade credit process, and in enforcing payments and contract terms, than private firms. I rule out that the endogeneity of the listing decision and the observable differences between public and private firms have driven my earlier results. Additional tests show that firm characteristics, industries types, and level of competition, have a significant impact on the level of trade credit provided by public and private firms. The results also indicate that both types of firms provided less trade credit during the recent financial crisis.

This dissertation consists of three essays on firm-level frictions and their aggregate implications. The first two chapters show that inter-firm lending plays an important role in business cycle fluctuations. In Chapter I, I theoretically investigate the role of supplier credit relationships in propagating and amplifying small shocks using a stylized model of inter-firm trade and lending. I build a network model of the economy in which trade in intermediate goods is financed by supplier credit. In the model, a financial shock to one firm affects its ability to make payments to its suppliers. The credit linkages between firms then transmit financial shocks across firms, amplifying their effects on aggregate output. In Chapter II, I embed this mechanism into a more general macroeconomic framework to study empirically the role that inter-firm credit plays in the business cycle. To calibrate the model, I construct a proxy of inter-industry credit flows from firm- and industry-level data. I find that the credit network of the US accounts for 22 percent of the fall in GDP occurring from an aggregate financial shock. Finally, I use a structural factor approach to estimate the shocks which affected US industrial production (IP) industries from 1997-2013. I find that most aggregate volatility in IP was driven by aggregate liquidity shocks and idiosyncratic productivity shocks, and that the credit network of IP industries generated 17 percent of observed aggregate volatility. During the recent recession, three-quarters of the drop in aggregate IP was due to an aggregate financial shock. Chapter III presents a theoretical investigation of the long-run relationship between international trade and unemployment. I develop and analyze a static general equilibrium model with labor market frictions and heterogeneous firms in which firms can engage in cross-border hiring by employing labor domestically or from abroad. This chapter outlines the conditions on the model parameters under which unemployment rises or falls after trade liberalization, and demonstrates that models in the literature which ignore cross-border hiring likely underestimate the upward force of trade liberalization on unemployment.

No description available.

No / A central element in developing credit management policy involves design choices on the extent to which credit activities are best managed internally or through specialist market intermediaries. This paper draws on the findings of a survey on the credit management practices and policies of large UK companies to: (1) Examine the type of firm most likely to enter into specialist external credit management structural arrangements; and (2) Identify contextual and credit policy choices influencing the credit period taken and late payment of debts. The study found that specialist intermediaries are not particularly common in large firms. The paper also identifies a number of contextual and policy variables that help explain variation in debtor days and late payment by customers.

Det är vanligt förekommande att företag låter sig leverantörsfinansieras med handelskrediter. Den internationella forskningen är omfattande rörande vilka egenskaper och förhållanden sommotiverar leverantörsfinansiering. Syftet med denna studie är att visa vilka faktorer som är bestämmande för användandet av handelskrediter i svenska små och medelstora företag. Undersökningen inriktas på att studera vilket samband lönsamhet och skuldsättning har till handelskrediter. Företags ålder och storlek studeras också i förhållande till handelskrediter.Studien genomförs med en multipel regressionsanalys där den beroende variabelnhandelskrediter representeras av leverantörsskulder. Vad gäller de obereonde variablernarepresenteras lönsamhet av avkastning på totalt kapital, skuldsättning av kortfristiga respektive långfristiga skulder, ålder är en logaritm av företagets ålder och storleken är enlogaritm av företagets omsättning. Resultatet visar att det finns ett samband mellan handelskrediter och lönsamhet samt skuldsättning. I båda fallen är detta samband negativt. Det innebär att om ett företag är lönsamt har företaget en mindre andel handelskrediter och om ett företag har stor andel skuldsättning minskar andelen handelskrediter. Förklaringen tilldet negativa sambandet vad gäller lönsamhet är pecking order - teorin. Skuldsättningens negativa samband förklaras av utbytesteorin. / It is common for corporations to be financed by their suppliers through trade credits. There are also a lot of international studies regarding the determinants of finance through tradecredit. The aim of this study is to investigate the determinant factors for the use of trade creditin swedish small and medium enterprises (SME). The study aims to investigate the relationship that profit and debt has to trade credits. I also intend to investigate how factors such as age and sizes of the company affect the use of trade credit. The study is made with amultiple linear regression analysis and the dependent variable trade credit is represented byaccounts payable. Regarding the independent variables, profit is represented by return onassets, debt is represented by short term and long term debt, age is a logaritm of thecompanies age and size is a logaritm of the companies turnover. The result shows that there isa relationship between trade credit, profit and debt. In both cases the relationship is significantand negative. This means that if a company is profitable it will receive less trade credit and ifa company has a big share of debt the share of received trade credits will be less. The explanation to the negative relationship regarding profit is the theory of pecking order. Regarding debt the negative relationship can be explanied with the substitution theory.

No description available.

We examine how access to bank credit affects trade credit in the supplier-customer relationships of U.S. public firms. For identification, we use exogenous liquidity shocks to supplier firms in the form of staggered changes to interstate bank branching laws. Using a variety of tests, we show that supplier firms with greater access to banking liquidity offer more trade credit to their customers. We also show that when bank branching restrictions are relaxed in the supplier's state, the supplier-customer relationship is more likely to survive. (C) 2015 Elsevier Inc. All rights reserved.