Corporate social responsibility and trade credit

Hongkang Xu (), Jia Wu () and Mai Dao ()
Additional contact information
Hongkang Xu: University of Massachusetts Dartmouth
Jia Wu: University of Massachusetts Dartmouth
Mai Dao: The University of Toledo

Review of Quantitative Finance and Accounting, 2020, vol. 54, issue 4, No 8, 1389-1416

Abstract: Abstract Prior studies show that higher corporate social responsibility (CSR) performance lowers firms’ cost of debt and equity financing. Using a sample of 16,463 U.S. firm-year observations that represent more than 2455 individual firms over the 1996–2016 period, we investigate the relation between all aspects of CSR and trade credit. We provide strong and robust evidence that higher overall CSR scores are related to a higher level of trade credit. A further examination reveals positive associations between trade credit and the four CSR individual components (i.e., the environment, employee relations, community, and diversity). Taken together, our results highlight the important signaling role that CSR plays in increasing the suppliers’ willingness to extend trade credit. Our study also has an important supply chain implication that emphasizes the role of CSR in designing contracts between buyers and suppliers and the level of trade credit for buyer firms with CSR investments.

Keywords: Corporate social responsibility; Trade credit; Signaling theory; Supply chain (search for similar items in EconPapers)
JEL-codes: D25 G32 M40 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)

Downloads: (external link)
http://link.springer.com/10.1007/s11156-019-00829-0 Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:rqfnac:v:54:y:2020:i:4:d:10.1007_s11156-019-00829-0

Ordering information: This journal article can be ordered from
http://www.springer.com/finance/journal/11156/PS2

DOI: 10.1007/s11156-019-00829-0

Access Statistics for this article

Review of Quantitative Finance and Accounting is currently edited by Cheng-Few Lee

More articles in Review of Quantitative Finance and Accounting from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().