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PurposeCorporate firms often follow their peer firms to articulate multiple financial decisions. Among the others, trade credit policy is a vital financial decision that can impart its dynamic role in achieving financial efficiency. Therefore, the current analysis aims to assess the role of herding behavior in determining the trade credit policies of corporate firms and its relevant effect on corporate financial performance.Design/methodology/approachFor this purpose, the financial data of 13089 nonfinancial sector firms from 50 countries are employed and the dynamic generalized method of moments (GMM) model to estimate the regression is applied.FindingsThe empirical findings first reveal that corporate firms actively mimic their peer firms regarding trade credit policies. However, this mimicking behavior hampers the financial performance due to noncompatibility with peers’ trade credit policies. Peer firms often develop such trade credit policies that are not applicable to corporate firms.Practical implicationsMainly, the findings of the study suggest two implications. First, it highlights the peer effect in terms of trade credit patterns. Second, it elaborates an adverse effect regarding financial performance due to herding of peers’ trade credit policies.Originality/valueThis study adds new thoughts regarding herding behavior in terms of trade credit policy and its possible consequences for corporate financial performance. No study explores such a relationship.

The purpose of this research is to examine the effects of corporate governance structures on earnings management behavior in a weakly governed and politically unstable environment. A panel of data from 35 non-bank companies listed on the Palestine Exchange between 2012 and 2019 was employed. A fixed effects regression model was used to examine the impact of certain board characteristics (board size, board meetings, and audit committee formation) and ownership structures (institutional ownership, foreign ownership, and ownership concentration) on earnings management in the volatile and risky political and economic environment of Palestine. The findings indicate that corporate governance and ownership systems in Palestine appear to be ineffective in constraining earnings management practices. None of the board attributes appear to constrain earnings management practices. However, there is weak evidence to show that ownership concentration has some effect in curbing earnings manipulation. The findings of this study are expected to increase awareness among Palestinian regulators, investors, and other policymakers regarding the role of boards of directors and institutional and foreign shareholders in monitoring Palestinian listed companies to enhance corporate governance and the quality of financial reporting.