Hedge fund activism and trade credit

Amanjot Singh

Global Finance Journal, 2022, vol. 53, issue C

Abstract: This study shows that trade creditors extend a negative response to hedge fund activism. Relative to control firms, target firms' accounts payable decrease by 28%, post activist intervention by hedge funds. This reduction is due to supply-side factors, highlighting suppliers' expropriation concerns. The study provides novel evidence that the repercussions of hedge fund activism extend beyond the formal debtholders, and informal debtholders such as trade creditors are not an exception. Further, target firms also offer lower trade credit to their customers after hedge fund activism. Trade receivables decrease by 12% relative to control firms. Activism-induced changes in cash flows potentially account for this reduction in trade receivables.

Keywords: Accounts payable; Hedge fund activism; Trade credit; Trade receivables (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1044028322000254
Full text for ScienceDirect subscribers only

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:eee:glofin:v:53:y:2022:i:c:s1044028322000254

DOI: 10.1016/j.gfj.2022.100723

Access Statistics for this article

Global Finance Journal is currently edited by Manuchehr Shahrokhi

More articles in Global Finance Journal from Elsevier
Bibliographic data for series maintained by Catherine Liu ().