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Surname relationship and trade credit: Evidence from China

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  • Xu, Qifa
  • Tan, Chao
  • Jiang, Cuixia
  • Zhao, Qinna

Abstract

Surname relationship is a typical culture in China, which may cause impact on companies’ access to trade credit, an important alternative financing channel for bank loans. To empirically examine this effect, we select A-share listed companies in Shanghai and Shenzhen Stock Exchanges from 2007 to 2018. We first measure the surname relationship between companies’ senior executives and their suppliers’ CEOs using manually collected data. Then, we conduct panel data regression analysis to investigate how surname relationship affects trade credit. The empirical results show that the surname relationship is significant for companies to obtain more trade credit. We further explore the heterogeneous impact of surname relationship on trade credit by considering mainly four different situations, and find that the effectiveness of surname relationship is more obvious especially for state-owned enterprises, companies located in the region with strong clan strength, as well as under the tight monetary policy. These results supplement related literature on “culture and finance” and the relationship between surname culture and corporate behavior, and make companies aware of the importance of relationship culture when making decisions.

Suggested Citation

  • Xu, Qifa & Tan, Chao & Jiang, Cuixia & Zhao, Qinna, 2022. "Surname relationship and trade credit: Evidence from China," Research in International Business and Finance, Elsevier, vol. 60(C).
    • Handle: RePEc:eee:riibaf:v:60:y:2022:i:c:s0275531921001987
    DOI: 10.1016/j.ribaf.2021.101577
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