Do the trade credit influence firm performance in agro-industry? Evidence from Thailand

Detthamrong, Umawadee; Chansanam, Wirapong

doi:10.1016/j.heliyon.2023.e14561

Cited by 6 publications

(5 citation statements)

References 36 publications

(69 reference statements)

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“…In line with the hypothesis H1, board size (Bsize) is negatively and significantly related to receivables, suggesting that a more giant board minimize a firm's operational risk. As the investment in trade receivables would tie up funds for other activities for some amount of time, this inconvenience might be significant in a country with few financing options for firms 21 . In this case, firms have to forgo investment in other opportunities.…”

Section: Regression Results and Discussionmentioning

confidence: 99%

“…Additionally, the use of trade credit carries the risk of bad debt, where buyers may default on their obligations to repay suppliers, negatively impacting a supplier firm's cash flow and profitability. The consequences of bad debts include implicit costs such as collection expenses, legal fees, and the opportunity cost associated with funds tied up in uncollectible debt 20,21 . Furthermore, Jacobson 22 and Dankiewicz 23 emphasize that credit losses arising from debtor default significantly elevate the risk of bankruptcy for creditors.…”

Section: Trade Credit and Firm Performancementioning

confidence: 99%

“…In line with the two potential theoretical effects, the impact of trade credit on firm performance is mixed at best, according to the literature review. Some studies point to a positive association 7,24,25 , while some others show negative linkages 21,26,27 .…”

Section: Trade Credit and Firm Performancementioning

confidence: 99%

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The impact of board size and independence on trade receivables in Vietnam

Nguyễn,

Nguyen

2024

Sci.Tech.Dev.J.-Eco.L

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Trade credit plays a significant role in firm performance, and proper corporate governance can help manage trade credit in the best interest of shareholders. Given the nature of high levels of information asymmetry and inadequate institutional quality in developing countries, the role of corporate governance linked to board characteristics is highly relevant in determining the level of trade credit granted. Even though trade credit might help firms win customers, excessive trade credit extension puts the firms at risk of working capital being abused by purchasers, and low liquidity which hampers smooth operations or even bankruptcy. In a developing country like Vietnam, it is likely that boards can act as a deterrence to business practices that are harmful to corporate performance. This research paper investigates the relationship between two board characteristics and trade receivables in Vietnam using data from 2010 to 2022. The research utilizes conventional panel data estimators, including the random effects model and the System Generalized Method of Moments. We find that board size tends to reduce trade receivables, implying that larger boards prevent firms from extending much trade credit which could lead to increased implicit costs and hamper firms’ liquidity. This result implies that firms benefit more from larger boards, rather than encounter troublesome coordination caused by more crowded boards. However, board independence is insignificantly associated with trade credit extension, suggesting that this factor does not help curb trade credit extension. This result negates the view that firms benefit more from independent directors and that independent directors do not necessarily enhance corporate governance in Vietnam. Based on these results, the research offers implications for the directors monitoring role and strategy management especially in a developing country.

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Section: Regression Results and Discussionmentioning

confidence: 99%

Section: Trade Credit and Firm Performancementioning

confidence: 99%

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The impact of board size and independence on trade receivables in Vietnam

Nguyễn,

Nguyen

2024

Sci.Tech.Dev.J.-Eco.L

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“…In particular, in developing countries, trade credit is valuable in terms of financial success. In this line, Detthamrong and Chansanam's [51] research spanning 2001-2020 on Thailand affirmed that trade credit significantly enhances firm performance and that firms' decisions on trade credit rely on cost-benefit analysis, underscoring the validity of commercial, financing, and transaction theories. Similarly, Huang et al [37], examining Chinese firms between 2003 and 2017, found that trade credit enhances sustainable growth rates, especially in firms with strong internal controls, and observed a greater reliance by private enterprises in regions with limited financial access.…”

Section: Literature Reviewmentioning

confidence: 99%

Dynamics of Trade Credit, Bank Credit Extension, Sustainable Economic Growth, and Imports: Evidence from the European Non-Financial Sector

Karaca

2023

Sustainability

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This study investigates the relationship between trade credit and sustainable economic growth, bank credit extension, and imports in the context of 15 European non-financial sectors spanning 2005Q1 to 2019Q2. Furthermore, it attempts to unveil the nonlinear relationship between trade and bank credit extension. To achieve these aims, balanced panel data are constructed and second-generation panel data are used to analyze Panel AMG Estimation, and an improved panel causality test for heterogeneous panels is employed. To enhance the robustness of the study, the results are scrutinized on a country-specific basis. The findings revealed a positive relationship between trade credit and both sustainable economic growth and imports, whereas a negative correlation was found with bank credit extension. These divergent outcomes at the country level were thoroughly discussed. Finally, a bilateral causality is identified between trade credit and economic growth, bank credit extension, and total manufacturing production, whereas a unidirectional causality is found with import activities.

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“…Adicional a esto, el entorno financiero que rodea las pymes es diverso, lo que ocasiona que el rigor con que son analizadas para acceder a los créditos sea ser mayor. Esta es una de las razones por las que empresas grandes y mejor establecidos tienden a tener mayor facilidad de acceder a créditos formales (Gur et al, 2023) y las pymes a créditos comerciales (Detthamrong & Chansanam, 2023). Sin embargo, debe de considerarse también que el emprendimiento, la innovación y el financiamiento son variables que está muy relacionadas (Sharma et al, 2023).…”

Section: Introductionunclassified

Afectación de la Reforma tributaria a la eficiencia financiera en pymes agrícolas de la Provincia de Los Ríos-Ecuador

Mosquera Arévalo,

Palma León,

Ballesteros Ballesteros

2023

rgn

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El objetivo de este estudio fue evaluar la afectación a la eficiencia financiera de las pymes del sector agrícola de Ecuador, luego de la aplicación de la ley de orgánica para la reactivación de la economía promulgada en diciembre de 2017. Fue aplicado el análisis envolvente de datos a las pymes agrícolas de la Provincia de Los Ríos que presentaron ingresos durante los años 2017, 2018 y 2019. Los inputs del modelo fueron: ingresos por ventas, impuesto a la renta, costos operacionales y gastos y los outputs fueron: margen neto y utilidades antes de impuestos. Pequeñas empresas disminuyeron su eficiencia para el año 2018 con una recuperación en el 2019. Medianas empresas incrementaron su eficiencia para el año 2018 y disminuyeron en 2019. Debido a la variación de los inputs y outputs observada, no puede concluirse que esta disminución de eficiencia se deba únicamente al impacto de la nueva ley.

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Do the trade credit influence firm performance in agro-industry? Evidence from Thailand

Cited by 6 publications

References 36 publications

The impact of board size and independence on trade receivables in Vietnam

The impact of board size and independence on trade receivables in Vietnam

Dynamics of Trade Credit, Bank Credit Extension, Sustainable Economic Growth, and Imports: Evidence from the European Non-Financial Sector

Afectación de la Reforma tributaria a la eficiencia financiera en pymes agrícolas de la Provincia de Los Ríos-Ecuador

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