Trade credit provision and stock price crash risk

Meng Wang, John W. Goodell, Wei Huang, Ying Jiang

Research output: Journal PublicationArticlepeer-review


We investigate the influence of trade-credit provision on stock-price crash risk in an emerging-market setting. Using a sample of Chinese listed firms, we find that trade credit provision significantly increases stock-price crash risk. Results are economically significant and robust to different measures of crash risk, alternative trade-credit calculations, and multiple model specifications. We interpret our results that, in China, an emerging market with a less developed credit environment, trade credit provision increases stock-price crash risk particularly through an information channel, this link being heightened when firm information asymmetry is more severe. We contribute to the relatively little research on how extension of credit by firms impacts their financial stability. Findings should be of great interest to scholars interested in the role of information disclosure in emerging financial markets; as well as to investors and regulators concerned about stock-price crash risk.

Original languageEnglish
Article number102908
JournalInternational Review of Financial Analysis
Publication statusPublished - Nov 2023


  • Chinese firms
  • Crash risk
  • Information asymmetry
  • Trade credit

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics


Dive into the research topics of 'Trade credit provision and stock price crash risk'. Together they form a unique fingerprint.

Cite this