On the Diminishing Return to Trade Credit
Document Type
Article
Publication Date
1-1-2015
School
Finance
Abstract
We examine the relation between excess returns and corporate trade credit policy. Robust results suggest a lower market value of receivables for firms with higher lagged receivables levels, consistent with diminishing returns from extending trade credit. Further findings indicate that the diminishing return to trade credit varies with industry affiliation, market share, and financial constraint. Our results emphasize the importance of actively monitoring trade credit levels.
Publication Title
Journal of Financial Research
Volume
38
Issue
3
First Page
305
Last Page
317
Recommended Citation
Hill, M.,
Kelly, G.,
Venkiteshwaran, V.
(2015). On the Diminishing Return to Trade Credit. Journal of Financial Research, 38(3), 305-317.
Available at: https://aquila.usm.edu/fac_pubs/18716