Differential Effects of Received Trade Credit and Provided Trade Credit on Firm Value

With over half a trillion dollars in trade credit flowing between firms the United States, it is critically important for managers to understand how that their firm receives and provides affect its value. Trade strategic investment supply chain relationships allows recipient make payment later rather than at time of sale. A downstream business customers also from upstream suppliers. Although research has shown provided builds firm's shareholder value, not examined what effect, if any, received on As result, one might assume affects value same manner as credit. We argue otherwise show have differential effects Received negative direct effect positive indirect (through profit), whereas effect. The difference hinges disparate nature dependence chain. Provided increases customers' firm, building In contrast, suppliers, destroying Empirical results using sample 2804 1986 2017 provide robust support hypotheses. They risk overestimating 1 SD increase (provided) by $284.74 ($74.95) million, average, they do consider both