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This study aims to examine the linear and non-linear effects of corporate social responsibility (CSR) engagement on trade receivables of listed firms in China. Furthermore, this paper analyzes whether CSR explains the provision for doubtful trade receivables.

The authors use a sample of listed firms in China over the period from 2008 to 2015. System generalized method of moments is used to estimate dynamic panel models.

CSR is positively related to trade receivables, in line with previous studies in this field. Nonetheless, the investigation of the non-linear effect of CSR reveals that CSR has an inverted U-shaped relationship with trade receivables. This implies that at low levels, CSR is more likely to be a tool to mitigate risk and/or build a trusting relationship between suppliers and buyers; whereas, at high levels, CSR is more prone to be subject to agency cost. The authors further find that CSR has a U-shaped relationship with the provision for bad trade receivables, which substantiates the above link between CSR and trade receivables.

Previous studies have extensively examined the link between trade credit extension and firm performance and determinants of trade credit. CSR can be connected to trade receivables in some ways, but very little effort has been exerted in verifying this relationship. In addition, CSR is linearly linked to trade receivables in previous literature, but theoretically, it can be expected to have a non-linear relationship with trade receivables. Furthermore, CSR has not been examined as a determinant of the provision for doubtful trade receivables. The authors aim to void the gaps here by using a sample of listed firms in China.

Existing studies that documented the effect of financial distress on trade credit provisions did not include measures financial constraint. It is possible that financial distress is tie to financial constraints, and both financial distress and financial constraints mutually reinforce each other in their effects on trade credit provision. The purpose of this study is to evaluate the effects of financial constraint and financial distress on trade credit provisions in the UK FTSE 350 listed firms.

This study employs panel data in the estimation of the determinants of accounts payables and accounts receivables of the UK FTSE 350 firms from 2009 to 2017.

This study finds that financial distress has significant positive effect on accounts payables and a significant negative effect on accounts receivables. Financial constraints have significant negative effect on accounts payables and a significant positive effect on accounts receivables.

Trade creditor desiring to maintain an enduring product-market relationship grant more concessions to customer in financial distress. The amount of trade credit that sellers provide to financially constrained firm is an increasing function of the buyer's creditworthiness. The urgent cash needs of financially distressed firms lead them to sell trade receivables to factoring company leading to reduction in trade receivables. Firm facing external financing constraints increase trade credit to customers in anticipation of cash flow inflow to enhance liquidity.

This study shows that financial distress and financial constraints mutually reinforce each other in their effects on trade credit provisions, and firm's financing condition contributes to divergence in trade credit policies.

The purpose of this paper is to identify three factors leading to the observed decline in trade credit offered from publicly traded firms.

The study conducts firm fixed effect regressions testing the relationship between cash flow volatility and firm investment in trade credit. The relationship is further examined with all firms separated into two groups, based on SIC codes, designating if they are in industries that traditionally offer higher amounts of trade credit.

The proportion of US firms that has traditionally extended the most trade credit has been decreasing over time, contributing to part of the decline in trade credit offered. Increases in cash flow volatility have also contributed to decreasing investment in trade credit. The negative relationship with cash flow volatility is greatest amongst firms that traditionally place the highest value on trade credit. Firms with access to credit, proxied by investment grade debt ratings, do not experience the same decline in trade credit offered.

Firms that value the ability to extend trade credit may maintain their level of investment in trade credit, even with increased risk of cash flow volatility, by maintaining a comparative advantage in access to credit.

This study extends prior findings by providing three previously unexplored explanations for the decline in offered trade credit seen in the USA. The changing make-up of publicly traded firms, a market-wide increase in cash flow volatility, and access to credit all play an important role in observed declines of trade credit investment.

The purpose of this paper is to extend the literature on trade receivables and trade payables by examining the determinants of net trade credit.

To do that, a sample of 67,047 firms in the UK with 443,190 firm year observations is used.

The results are robust to unobserved heterogeneity and industry effects. The evidence suggests that firms with more inventories, market share and are financially distressed invest less in trade credit. Moreover, higher operating cash flow, annual sales growth, export propensity, access to bank credit and larger firms lead to higher investment in trade credit.

Additionally, the paper broadens the scope of the literature by analysing the determinants of net trade credit around the financial crisis and industry competitiveness.

The purpose of this paper is to identify the relation between cash flow volatility and trade credit offered by firms in developing Asian economies.

The study conducts country fixed effect regressions testing the relationship between cash flow volatility and firm investment in trade credit. The relationship is then examined with all firms separated into two groups based on firm size, and then again comparing the relation before and after the 2008 finasncial crisis.

Higher levels of cash flow volatility are negatively related to the amount of trade credit offered. The negative relationship with cash flow volatility is greater amongst smaller firms that may have less access to external sources of capital. Additionally, the negative relationship is greater following the 2008 financial crisis.

Trade credit plays an important role in the business process, particularly in developing economies. However, these firms may not be able to maintain their investment in trade credit when experiencing greater levels of cash flow volatility. These results are especially pronounced after the 2008 financial crisis and for small firms.

This study identifies an important connection between cash flow volatility and firm investment in trade credit among firms in developing Asian economies.

The purpose of this paper is to verify whether the benefits gained by granting extended payment terms can lead to higher profitability for Italian companies. Moreover, the analysis aims to investigate whether trade credit offered at a higher level than the sector average can contribute to the profitability of companies. Finally, it aims to test whether the profitability connected to granting trade credit is higher for the unconstrained and financially sound companies.

The empirical analyses are conducted on a sample of Italian firms, over the period 2008–2016. The methodologies used to test research hypotheses are panel analysis with fixed effects and random effects models, as well as the generalized method of moment (GMM).

The results show the contribution of trade credit to the profitability of Italian companies. The empirical analysis also suggests that companies might improve their profitability by increasing investments in trade receivables to a greater extent than companies in their business sector. Finally, the greater use of payables to suppliers and the higher incidence of bank debt reduce the contribution of accounts receivable to the profitability of companies.

This study contributes to the existing literature as very few studies have analyzed whether trade credit offered at a higher level than the sector average may contribute to the profitability of companies. Moreover, the study provides new evidence on the moderation effect of payables to banks and suppliers on the contribution of granting trade credit to company performance.

This case raises the question: How does a company reasonably estimate and record entries for uncollectible trade receivables, and under what circumstances are receivables written off as uncollectible? The required accounting transactions for the case involve estimating a receivables allowance both as a percentage of sales and as a percentage of accounts receivable and making specific account judgments under the direct write?off method. The subjective issues involve analyzing and assessing a company's methods of collection and accounting for bad debts.

Literature sparsely documents the association between the deviant behavior of a firm and its financial policies. Trade credit is one of the most critical financial policies of a firm. In this study, the authors examine the association between strategic deviance and trade credit.

The authors explore a strategy-based explanation for trade credit by examining whether strategic deviance affects trade credit using a sample of 33 countries from 1996 to 2020. The authors test the hypothesis using static OLS regression models. To address autocorrelation and endogeneity issues, the authors use dynamic OLS models, lag models, and instrumental variable approach.

The authors find that an increase in strategic deviance reduces both demand and supply of trade credit, and the study’s results indicate that a one standard deviation increase in strategic deviance leads to a 1.34% decrease in the demand for trade credit. Also, a one standard deviation increase in strategic deviance leads to a 2.26% fall in the supply of trade credit.

This study facilitates managers to formulate trade credit policies when choosing a deviant strategy.

To the best of the authors’ knowledge, this is the first study to explore the association between strategic deviance and trade credit policies.

The purpose of this paper is to investigate the use of trade credit in a sample of small and medium enterprises in Europe, before and after the outbreak of the subprime financial crisis and the sovereign debt crisis (2006-2013). This study aims to verify whether trade credit is an alternative source of funding compared to other sources of financing. In addition, it tests whether firms that grant extended payment terms to their customers demand delayed accounts payable terms from their suppliers.

The empirical analysis is conducted on a sample of European SMEs that were observed over the period immediately before and after the outbreak of the subprime crisis (2008) and the sovereign debt crisis (2010-2011). A panel data analysis is conducted using the generalized method of moment.

The results suggest that SMEs with a high probability of insolvency use trade credit more extensively. Distressed and weaker SMEs are less able to match accounts receivable to accounts payable. Finally, the evidence suggests that during the financial crises, the substitution hypothesis is weakened and liquidity shocks are propagated through trade credit channels.

This study contributes to the extant literature as very few studies have analyzed intercompany financing for European SMEs during periods of financial crisis. The results suggest that supporting trade credit channels, through timely injections of liquidity to companies, could reduce the impact of both financial and intercompany credit crunch on SMEs.

Bootstrapping is a practitioner-based term adopted in entrepreneurship to describe the techniques employed in micro, small and medium-sized enterprises (MSMEs) to minimise the need for external funding by securing resources at little or no cost and applying strategies to effectively use resources. Working capital management (WCM) is a term used in financial management to define a set of practices used to manage business resources, including cash management. This paper explores the overlap and divergence between these two disciplinary distinct concepts.

A dual methodology is employed. First, the usage of the two terms in prior literature is analysed and synthesised. Second, the study uses factor analysis to explore how bootstrapping practices described by owners of 167 established MSMEs relate to the components of WCM in financial management.

The factor analysis identifies two main bootstrapping practices employed by MSMEs: (1) delaying payments and owner-related bootstrapping and (2) customer-related bootstrapping. Delaying payments is an integral practice in trade payables management and customer-related bootstrapping includes practices that are integral to trade receivables management. Therefore, links between bootstrapping practices and WCM practices are firmly established.

The study is not without limitations. Based on cross-sectional evidence for established firms in Ireland only, future studies could explore cross-country longitudinal panel data to fully examine life cycle and sectoral effects, as well as other external shocks (for example, COVID-19) on bootstrapping and WCM practices. This study does not explain why some factors (for example, joint utilisation and inventory management) are present in some bootstrapping studies and not in others; further case study research might help explain this. Finally, changes in the business environment facing start-ups and established enterprise, including increased digitalisation, online trading, self-employment, remote hub working and sustainability, offer new avenues for bootstrapping research.

This is the first study to comprehensively explore the conceptual and empirical links between bootstrapping and WCM. This study will enable researchers and practitioners in these two distinct disciplines to learn from each other. Accounting researchers and practitioners can broaden their understanding of how WCM “works” in MSME settings. Similarly, entrepreneurship researchers and practitioners can deepen their understanding of how bootstrapping can be adopted by businesses to manage resources effectively.