The authors gratefully acknowledge the helpful comments and suggestions received during the editing/review process. This research is part of the project 15358/PHCS/10 financed by Fundación Séneca Science and Technology Agency of the Region of Murcia (Spain) – (Program: PCTIRM 1114), and the project SEJ 6828 financed by the Economy, Innovation and Science Agency of Andalusia. We also acknowledge support from Fundación CajaMurcia.
Trade credit policy and firm value
Version of Record online: 13 JUN 2012
© 2012 The Authors. Accounting and Finance © 2012 AFAANZ
Accounting & Finance
Volume 53, Issue 3, pages 791–808, September 2013
How to Cite
Martínez-Sola, C., García-Teruel, P. J. and Martínez-Solano, P. (2013), Trade credit policy and firm value. Accounting & Finance, 53: 791–808. doi: 10.1111/j.1467-629X.2012.00488.x
- Issue online: 27 AUG 2013
- Version of Record online: 13 JUN 2012
- Received 2 December 2010; accepted 17 April 2012 by Robert Faff (Editor).
- Accounts receivable;
- Trade credit;
- Firm value
This manuscript studies the shape of the relation between firm value and trade credit for a sample of Spanish listed firms in the period 2001 to 2007. Considering the trade-off between benefits and costs of investing in trade credit, we estimate a non-linear relationship between accounts receivable and firm value. As expected, the results obtained show a positive relation between firm value and trade credit at low levels of receivables and a negative one at high levels. To give robustness to the results, we analyse whether deviation from target accounts receivable level reduces firm value. Consistent with the previous analysis, we find that deviations from this level of receivables decrease firm value.