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Dual class firms and trade credit

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  • Sah, Nilesh B.
  • More, Deepak G.

Abstract

Firms with dual class structure can suffer from poor corporate governance and may utilize strategies that can help them avert monitoring by outsiders. We find that dual class firms use less trade credit as compared to non-dual class firms. We believe that this behavior is motivated by their antipathy towards supplier oversight. Our results are especially relevant for non-manufacturing and high bargaining power dual class firms. We extend the literature by shedding light on trade credit policies of dual class firms and by presenting an additional metric to assess operational transparency and monitoring preferences of dual class firms.

Suggested Citation

  • Sah, Nilesh B. & More, Deepak G., 2022. "Dual class firms and trade credit," Finance Research Letters, Elsevier, vol. 46(PA).
    • Handle: RePEc:eee:finlet:v:46:y:2022:i:pa:s1544612321003354
    DOI: 10.1016/j.frl.2021.102303
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    2. Zhou, Zhongsheng & Li, Zhuo, 2023. "Corporate digital transformation and trade credit financing," Journal of Business Research, Elsevier, vol. 160(C).

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    More about this item

    Keywords

    Dual class; Trade credit; Monitoring; Corporate governance;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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