Trade credit provision and national culture

Sadok El Ghoul, Xiaolan Zheng

Research output: Journal PublicationArticlepeer-review

78 Citations (Scopus)

Abstract

In this paper we investigate the relation between trade credit provision and national culture as captured by Hofstede's four cultural dimensions (collectivism/individualism, power distance, uncertainty avoidance, and masculinity/femininity). Consistent with our predictions based on several theories of trade credit, we find that after controlling for firm- and country-level factors as well as industry effects, trade credit provision is higher in countries with higher collectivism, power distance, uncertainty avoidance, and masculinity scores. These results are robust to using alternative measures of culture and trade credit, alternative sample compositions, and alternative estimation methods, as well as to addressing potential endogeneity concerns. International trade openness, however, mitigates the relation between trade credit provision and our proxies for national culture.

Original languageEnglish
Pages (from-to)475-501
Number of pages27
JournalJournal of Corporate Finance
Volume41
DOIs
Publication statusPublished - 1 Dec 2016

Keywords

  • Collectivism
  • Masculinity
  • National culture
  • Power distance
  • Trade credit
  • Uncertainty avoidance

ASJC Scopus subject areas

  • Business and International Management
  • Finance
  • Economics and Econometrics
  • Strategy and Management

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