Does trade credit respond to negative shocks to customer firms?

Resumo

We investigate how the provision of trade credit by suppliers reacts when their customer firms suffer an adverse shock. We exploit an exogenous adverse shock to firms in the Brazilian food industry caused by the public announcement of a fraud investigation named Operation Weak Flesh. Using a within-firm differences-in-differences identification strategy, we found that customers suffered a negative impact of around 20 to 30% in their accounts payable, while suppliers reduced their credit provision by around 5 to 6%. The evidence suggests that suppliers would rather shield themselves against increased risks in the supply chain than try to save their customers and their relationship with them.

Ficha do documento

Tipo

Dissertação

Ano

2018

Instituição

Fundação Getulio Vargas

Fonte

Repositório da FGV

Idioma

Inglês

Acesso

Acesso aberto

Identificador

oai:repositorio.fgv.br:10438/22980

Temas

TransportesAdministração PúblicaGovernança

Palavras-chave

Trade creditAdverse shockSupply chainCorporate fraudBuyer-seller relationshipAdministração públicaCrédito comercialLogística empresarialGovernança corporativaFraudeRelações interorganizacionais