Accounts payable and firm value: International evidence

Hocheol Nam and Konari Uchida

Journal of Banking & Finance, 2019, vol. 102, issue C, 116-137

Abstract: We conduct a difference-in-differences (DID) analysis that uses the global financial crisis (GFC) in 2008 as an exogenous shock to examine the value effects of accounts payable. Analyses of 136,783 firm-year observations (21,765 companies) from 40 countries show that accounts payable significantly absorbed the reduction of Tobin's Q during the GFC. The value effect is pronounced for civil law, long-term-oriented, and high-uncertainty-avoidance countries, in which long-term relations are likely beneficial. These results are obtained after controlling for other country- and firm-level characteristics as well as with alternative definitions of the global financial crisis and accounts payable. We also find that trade credit in those countries prevents a significant reduction in inventory investments during the GFC.

Keywords: Accounts payable; Global financial crisis; Legal origin; Long-term orientation; Uncertainty avoidance; Firm value (search for similar items in EconPapers)
JEL-codes: G14 G32 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:102:y:2019:i:c:p:116-137

DOI: 10.1016/j.jbankfin.2019.03.010

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