Can the SME promotion law curb trade credit exploitation by listed companies? — Evidence from a supply chain perspective

From a supply chain perspective, this paper examines whether the implementation of the SME Promotion Law in 2018 affected the payment behavior of listed companies toward their SME suppliers. Empirical results show that listed companies with SME suppliers significantly reduced their accounts payable and payment periods after the policy was enacted, consistent with a decline in opportunistic trade credit appropriation in asymmetric buyer–supplier relationships. Mechanism analyses indicate that this effect is mainly associated with heightened litigation risk and increased social attention induced by the law. The policy effect is more pronounced among firms with weaker repayment capacity or lower voluntary repayment motivation, in regions with weaker legal enforcement, and in industries with higher inventory turnover. Further analysis shows that firms with greater policy-induced improvement in payment behavior received more government subsidies and exhibited higher firm value. Overall, the findings highlight the role of legal intervention in shaping supply chain payment governance in an emerging market setting.