 Linking labor with capital: How employee friendly treatment impact trade credit availabilityYaoqin Li Pacific-Basin Finance Journal, 2024, vol. 87, issue C Abstract: This study explores the value of employee friendly treatment from a signaling theory perspective by relating it to corporate trade credit. Theoretically, employee friendly treatment signals firms' high possibility of “will and able” to perform obligations, which strengthens firms' bargaining power in striving for trade credit. The empirical tests show a positive relationship between employee friendly treatment and trade credit availability. The positive effect of employee friendly treatment on trade credit is more prominent in firms with lower market power and firms located in areas with weaker legal enforcement, lower level industrialization and poorer high education popularity. Overall, the study establishes a link between labor and capital market, implying that firms' treatment to employees who are internal stakeholders can be a cue for outsider stakeholders such as suppliers to alter the provision of trade credit. Keywords: Employee friendly treatment; Trade credit; Signaling theory; Market power (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:87:y:2024:i:c:s0927538x24002282 DOI: 10.1016/j.pacfin.2024.102476 Access Statistics for this article Pacific-Basin Finance Journal is currently edited by K. Chan and S. Ghon Rhee More articles in Pacific-Basin Finance Journal from Elsevier |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.