Surname relationship and trade credit: Evidence from China

Qifa Xu, Chao Tan, Cuixia Jiang and Qinna Zhao

Research in International Business and Finance, 2022, vol. 60, issue C

Abstract: Surname relationship is a typical culture in China, which may cause impact on companies’ access to trade credit, an important alternative financing channel for bank loans. To empirically examine this effect, we select A-share listed companies in Shanghai and Shenzhen Stock Exchanges from 2007 to 2018. We first measure the surname relationship between companies’ senior executives and their suppliers’ CEOs using manually collected data. Then, we conduct panel data regression analysis to investigate how surname relationship affects trade credit. The empirical results show that the surname relationship is significant for companies to obtain more trade credit. We further explore the heterogeneous impact of surname relationship on trade credit by considering mainly four different situations, and find that the effectiveness of surname relationship is more obvious especially for state-owned enterprises, companies located in the region with strong clan strength, as well as under the tight monetary policy. These results supplement related literature on “culture and finance” and the relationship between surname culture and corporate behavior, and make companies aware of the importance of relationship culture when making decisions.

Keywords: Surname relationship; Trade credit; Informal institutions; Information asymmetry (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:60:y:2022:i:c:s0275531921001987

DOI: 10.1016/j.ribaf.2021.101577

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