Trade credit policy and firm value

摘要

This manuscript studies the shape of the relation between firm value and trade credit for a sample of Spanish listed firms in the period 2001 to 2007. Considering the trade-off between benefits and costs of investing in trade credit, we estimate a non-linear relationship between accounts receivable and firm value. As expected, the results obtained show a positive relation between firm value and trade credit at low levels of receivables and a negative one at high levels. To give robustness to the results, we analyse whether deviation from target accounts receivable level reduces firm value. Consistent with the previous analysis, we find that deviations from this level of receivables decrease firm value.