Mandatory ESG disclosure and trade credit: international evidence

Kuangyu Chen, Anqi Li, Yi Si and Gaoliang Tian

Asia-Pacific Journal of Accounting & Economics, 2025, vol. 32, issue 5, 879-901

Abstract: This study documents that worldwide mandatory ESG disclosure significantly increases firms’ use of trade credit. The baseline results hold across staggered differences-in-differences design, alternative samples test, dynamic effect model, and heterogeneity treatment analyses. Enhanced financial reporting quality and accounting conservatism are channels through which ESG disclosure affects trade credit. The baseline effect is stronger for disclosure initiated by stock exchanges, firms in civil law markets, firms in non-climate-vulnerable industries, and firms with lower market shares. These findings underscore the pivotal role of ESG disclosures in fostering trust and facilitating trade credit provision.

Date: 2025
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DOI: 10.1080/16081625.2025.2459673

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

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