Supplier Financing and Earnings Quality

19 Pages Posted: 24 Dec 2014

Date Written: November/December 2014

Abstract

In this paper we investigate the effect of earnings quality on supplier credit in a sample of small and medium‐sized firms. After controlling for other determinants of trade credit, we show that firms whose earnings present lower variability, higher smoothing and predictability, and higher accruals quality have access to more trade credit from suppliers. This association suggests that earnings attributes associated to lower volatility and higher precision with respect to cash flows facilitate access to trade credit.

Keywords: earnings quality, earnings variability, smoothness, accruals quality, earnings predictability, suppliers financing, trade credit

Suggested Citation

García‐Teruel, Pedro J. and Martínez‐Solano, Pedro and Sánchez-Ballesta, Juan P., Supplier Financing and Earnings Quality (November/December 2014). Journal of Business Finance & Accounting, Vol. 41, Issue 9-10, pp. 1193-1211, 2014, Available at SSRN: https://ssrn.com/abstract=2542429 or http://dx.doi.org/10.1111/jbfa.12090

Pedro J. García‐Teruel (Contact Author)

University of Murcia

Avda Teniente Flomesta, 5
Murcia, Murcia 30100
Spain

Pedro Martínez‐Solano

University of Jaén

23071 Jaen
Spain

Juan P. Sánchez-Ballesta

University of Murcia ( email )

Avda Teniente Flomesta, 5
Murcia, Murcia 30100
Spain

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
0
Abstract Views
1,272
PlumX Metrics