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The impact of customer concentration on the provision of reverse trade credit

Author

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  • Yuhan Li
  • Mengjie Zhang

Abstract

PurposeThe purpose of this study is to investigate the impact of customer concentration on the provision of reverse trade credit at the firm level.Design/methodology/approachUtilizing unbalanced panel data of Chinese A-share listed firms from 2007 to 2022 as the study sample, this paper employs a fixed-effects model to investigate the association between customer concentration and firms’ reverse trade credit.FindingsThis study finds that firms with higher customer concentration receive less reverse trade credit. Heterogeneity tests reveal a significant amplification of reverse trade credit in high-tech firms but a detrimental impact in large-sized, competitive and high-analyst-following firms. Further studies conclude that firms’ motivations, including bargaining power, financing and transaction guarantee motivations, collectively influence the extent of reverse trade credit acquisition.Originality/valueTo our knowledge, this paper represents the first attempt to conduct a comprehensive investigation of reverse trade credit, specifically through the lens of customer concentration, utilizing firm-level panel data sourced from a singular country.

Suggested Citation

  • Yuhan Li & Mengjie Zhang, 2024. "The impact of customer concentration on the provision of reverse trade credit," Asian Review of Accounting, Emerald Group Publishing Limited, vol. 33(2), pages 291-319, September.
    • Handle: RePEc:eme:arapps:ara-01-2024-0030
    DOI: 10.1108/ARA-01-2024-0030
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    Cited by:

    1. Li, Yuhan & Zhang, Mengjie, 2026. "Supply chain risk and precautionary liquidity: How customer concentration shapes corporate cash holdings in China," International Review of Economics & Finance, Elsevier, vol. 109(C).

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