Peer influence on trade credit

Gymiah, D., Machokoto, M. and Sikochi, A. (2020) Peer influence on trade credit. Journal of Corporate Finance. 64, pp. 1-58. 0929-1199.

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Abstract:

We examine the influence of peer firms on trade credit policies of listed firms in the United States. We posit and find evidence that firms mimic their peers in formulating trade credit policies. The findings are more pronounced for firms that operate in highly competitive product markets and an uncertain information environment. Our results show that firms not only mimic peers in similar circumstances but also imitate their more and less successful peers. We find that the benefits of mimicking peers' trade credit policies increase initially, but for firms that already maintain high levels of trade credit, these benefits diminish faster as the intensity of mimicking increases. Our results are robust to different methods of selecting peers, sampling, different proxies, and estimation techniques.

Uncontrolled Keywords:

Trade credit, Peer effects, Product market competition

Creators:

Gymiah, D., Machokoto, M. and Sikochi, A.

Faculties, Divisions and Institutes:

Faculties > Faculty of Business & Law > Accounting & Finance

Date:

25 June 2020

Date Type:

Acceptance

Page Range:

pp. 1-58

Journal or Publication Title:

Journal of Corporate Finance

Volume:

Number of Pages:

Language:

English

DOI:

10.1016/j.jcorpfin.2020.101685

ISSN:

0929-1199

Status:

Published / Disseminated

Refereed:

Yes

Related URLs: