Trade credit and firm value in business groups: evidence from Korea

Woo Sung Kim, Sang Hoon Lee, Keun Jung Lee and Kunsu Park

Asia-Pacific Journal of Accounting & Economics, 2024, vol. 31, issue 4, 672-695

Abstract: This study examines the relation between trade credit and firm value in the context of business groups (i.e. chaebols). We find that the use of accounts receivable negatively influences firm value, and this negative impact is more pronounced for group-affiliated firms than for stand-alone firms. We further find that the negative moderating role of business groups on trade credit-firm value nexus is stronger for firms with lower product market competition, lower large shareholder ownership, higher cash holdings, and higher financial distress. Our main findings are robust to an endogeneity concern, an alternative proxy for trade credit, and different estimation specifications. Our empirical evidence sheds light on how the use of trade credit can potentially be linked to firm value from the perspective of business groups. Our findings can help stakeholders, including investors and creditors, better understand the trade credit-firm value link in the context of business groups.

Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/16081625.2024.2336133 (text/html)
Access to full text is restricted to subscribers.

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:taf:raaexx:v:31:y:2024:i:4:p:672-695

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/raae20

DOI: 10.1080/16081625.2024.2336133

Access Statistics for this article

Asia-Pacific Journal of Accounting & Economics is currently edited by Yin-Wong Cheung, Hong Hwang, Jeong-Bon Kim, Shu-Hsing Li and Suresh Radhakrishnan

More articles in Asia-Pacific Journal of Accounting & Economics from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().