IDEAS home Printed from https://ideas.repec.org/a/taf/applec/v54y2022i15p1742-1758.html
   My bibliography  Save this article

The relationship between tax uncertainty and trade credit: firm-level evidence from the United States

Author

Listed:
  • Mehmet Serkan Tosun
  • Serhat Yildiz

Abstract

We examine whether firms’ tax uncertainty affect their trade credit and inventory investment policies. Using a measure of tax uncertainty based on an accounting reserve for contingent tax liability, we find that tax uncertainty is negatively associated with trade credit use and inventory investment. In terms of economic significance, the effect of tax uncertainty on trade credit use is comparable to those of the firm’s cash flow and leverage. Overall, our findings highlight a new channel through which tax planning policies affect corporate decisions and show that the firm’s tax planning policies are important determinants of its trade credit use and inventory investment. Our results are robust to different empirical specifications and tests.

Suggested Citation

  • Mehmet Serkan Tosun & Serhat Yildiz, 2022. "The relationship between tax uncertainty and trade credit: firm-level evidence from the United States," Applied Economics, Taylor & Francis Journals, vol. 54(15), pages 1742-1758, March.
    • Handle: RePEc:taf:applec:v:54:y:2022:i:15:p:1742-1758
    DOI: 10.1080/00036846.2021.1982129
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/00036846.2021.1982129
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/00036846.2021.1982129?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kathleen Petrie Fuller & Qun Wu & Serhat Yildiz, 2024. "Corporate debt policy and tax uncertainty," Review of Quantitative Finance and Accounting, Springer, vol. 62(1), pages 247-270, January.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:applec:v:54:y:2022:i:15:p:1742-1758. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/RAEC20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.