Empirical Evidence of Trade Credit Uses of Brazilian Publicly ‐ Listed Companies

Márcia Lima Bandeira E-mail address: [email protected] Escola de Administração de Empresas de São Paulo/Fundação Getulio Vargas São Paulo, SP, Brazil. ABSTRACT While trade credit may be used as a substitute for bank loans, we find empirical evidence that listed firms do use bank debt and trade credit as two complementary sources of financing in line with recent theoretical papers (e.g. Biais & Gollier, 1997) and evidence found in other empirical works (e.g. Alphonse, Ducret, & Séverin, 2006). By using a sample of 263 publicly-listed companies from 2006, our findings empirically support that trade credit may be used as (i) a sign of the firm’s quality, and (ii) a way of facilitating access to bank debt as trade credit seems to be a substitute for bank debt.