An empirical analysis of the effect of financial distress on trade credit

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An empirical analysis of the effect of financial distress on trade credit

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dc.contributor.author Preve, Lorenzo
dc.date.accessioned 2016-10-06T16:29:46Z
dc.date.available 2016-10-06T16:29:46Z
dc.date.issued 2003
dc.identifier.citation Molina, C. A. and Preve, L. A. (2012), An Empirical Analysis of the Effect of Financial Distress on Trade Credit. Financial Management, 41: 187–205. doi:10.1111/j.1755-053X.2012.01182.x en_US
dc.identifier.uri https://riu.austral.edu.ar/handle/123456789/207
dc.description.abstract This paper studies the use of supplier's trade credit by firms in financial distress. Trade credit represents a large portion of firms’ short-term financing and plays an important role in financial distress. We find that firms in financial distress use a significantly larger amount of trade credit to substitute for alternative sources of financing. Firms that are smaller, with less market power, and with more unique products tend to use more trade credit financing when in distress. We also find that firms that significantly increase their trade payables when in financial distress, experience an additional drop of at least 11% in sales and profitability growth over the previously documented 21% average drop for financially troubled firms. en_US
dc.language.iso en en_US
dc.publisher Financial Management Association Annual Meeting, Denver. en_US
dc.subject financial distress en_US
dc.subject financial debt en_US
dc.subject Trade Credit en_US
dc.title An empirical analysis of the effect of financial distress on trade credit en_US


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