The impact of customer concentration on the provision of reverse trade credit

Yuhan Li and Mengjie Zhang

Asian Review of Accounting, 2024, vol. 33, issue 2, 291-319

Abstract: Purpose - The purpose of this study is to investigate the impact of customer concentration on the provision of reverse trade credit at the firm level. Design/methodology/approach - Utilizing unbalanced panel data of Chinese A-share listed firms from 2007 to 2022 as the study sample, this paper employs a fixed-effects model to investigate the association between customer concentration and firms’ reverse trade credit. Findings - This study finds that firms with higher customer concentration receive less reverse trade credit. Heterogeneity tests reveal a significant amplification of reverse trade credit in high-tech firms but a detrimental impact in large-sized, competitive and high-analyst-following firms. Further studies conclude that firms’ motivations, including bargaining power, financing and transaction guarantee motivations, collectively influence the extent of reverse trade credit acquisition. Originality/value - To our knowledge, this paper represents the first attempt to conduct a comprehensive investigation of reverse trade credit, specifically through the lens of customer concentration, utilizing firm-level panel data sourced from a singular country.

Keywords: Customer concentration; Reverse trade credit; Heterogeneity analysis; Customer prepayment motivation (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eme:arapps:ara-01-2024-0030

DOI: 10.1108/ARA-01-2024-0030

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