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Trade credit policy and firm value

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  • Cristina Martínez Sola

    ()
    (Dpto. Economía Financiera y Contabilidad)

  • Pedro J. García-Teruel

    ()
    (Universidad de Murcia)

  • Pedro Martínez Solano

    (Universidad de Murcia)

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    Abstract

    This paper studies the shape of the relation between firm value and trade credit for a sample of Spanish listed firms in the period 2001 to 2007. Considering the tradeoff between benefits and costs of investing in trade credit we estimate a non-linear relationship between accounts receivable and firm value. As expected, the results obtained show a positive relation between firm value and trade credit at low levels of receivables and a negative one at high levels. To give robustness to the results, we analyze whether deviation from target accounts receivable level reduces firm value. Consistent with the previous analysis, we find that deviations from this level of receivables decrease firm value. Este trabajo estudia la relación entre el valor de la empresa y el crédito comercial para una muestra de empresas españolas cotizadas durante el período 2001 a 2007. A partir del tradeoff entre beneficios y costes de la inversión en crédito comercial, se analiza la existencia de una relación no lineal entre clientes y valor de la empresa. Conforme a las hipótesis planteadas, los resultados obtenidos muestran una relación positiva entre valor y crédito comercial para niveles bajos de inversión en clientes y una relación negativa para niveles altos. Para dar robustez a estos resultados, también se analiza si las desviaciones respecto del nivel objetivo de crédito a clientes reducen el valor de la empresa. Consistente con el análisis previo, se obtiene que las desviaciones de este nivel de clientes reducen el valor de la empresa.

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    File URL: http://www.ivie.es/downloads/docs/wpasec/wpasec-2012-01.pdf
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    Bibliographic Info

    Paper provided by Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) in its series Working Papers. Serie EC with number 2012-01.

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    Length: 28 pages
    Date of creation: Jan 2012
    Date of revision:
    Publication status: Published by Ivie
    Handle: RePEc:ivi:wpasec:2012-01

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    Related research

    Keywords: clientes; crédito comercial; valor de la empresa accounts receivable; trade credit; firm value;

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    References

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