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Does Risk Disclosure Matter for Trade Credit?

Author

Listed:
  • Issal Haj-Salem

    (Department of Accounting, Institute of Higher Commercial Studies of Carthage, University of Carthage, Carthage 1054, Tunisia)

  • Khaled Hussainey

    (Accounting and Financial Management Group, Faculty of Business and Law, University of Portsmouth, Portsmouth PO1 3DE, UK)

Abstract

In this paper, we examine the impact of risk disclosure practices on trade credit. We hypothesize that risk information could reduce information opacity that arises between companies and their suppliers. We collected annual reports for Tunisian listed companies for the period 2008–2013. This gives us 146 firm-year observations. We find that risk disclosure has a positive impact on the level of trade credit. Our paper offers a new empirical evidence on the role of risk disclosure in reducing information asymmetry and increase companies’ access to short-term external funds. Our study provides managerial implications for firms, suppliers, and regulatory authorities.

Suggested Citation

  • Issal Haj-Salem & Khaled Hussainey, 2021. "Does Risk Disclosure Matter for Trade Credit?," JRFM, MDPI, vol. 14(3), pages 1-13, March.
    • Handle: RePEc:gam:jjrfmx:v:14:y:2021:i:3:p:133-:d:521124
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    References listed on IDEAS

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    1. Li, Hong-Quan & Yang, Yang & Xue, Feng-Wan & Liu, Zhi-Yi, 2024. "Annual report readability and trade credit financing: Evidence from China," Research in International Business and Finance, Elsevier, vol. 69(C).

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