miun.sePublications
Change search
CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf
The impact of trade credit use on firm profitability: Empirical evidence from Sweden
Mid Sweden University, Faculty of Human Sciences, Department of Business, Economics and Law.
Mid Sweden University, Faculty of Human Sciences, Department of Business, Economics and Law.
2016 (English)In: Journal of Advances in Management Research, ISSN 0972-7981, E-ISSN 2049-3207, Vol. 13, no 2, 116-129 p.Article in journal (Refereed) Published
Abstract [en]

Purpose– The purpose of this paper is to examine the impact of trade credit as a funding source on profitability among small and medium-sized enterprises (SMEs).

Design/methodology/approach– A large cross-sectional panel data set covering 15,897 Swedish SMEs in five industry sectors from 2009 to 2012 was analysed using several statistical techniques.

Findings– The study provides empirical evidence that the use of trade credit significantly and negatively affects firm profitability, indicating that SMEs with lower accounts payable are more profitable. Furthermore, liquidity level and firm size are positively related to profitability, while firm age is negatively related to profitability.

Practical implications– If firms rely, or are forced to rely, too heavily on accounts payable as a funding source, their long-term profitability could be jeopardized. An efficient financing policy should make the costs related to the use of trade credit more transparent. Thus, firm managers could explicitly use trade credit agreements with their suppliers to control the costs related to this particular financial source.

Originality/value– To the authors’ knowledge, this study is the first to focus on the impact of trade credit on profitability in the Swedish context, where SMEs are encouraged to use trade credit as a funding source. In addition, the study is based on an extensive sample of SMEs across several industry sectors.

Place, publisher, year, edition, pages
2016. Vol. 13, no 2, 116-129 p.
Keyword [en]
Profitability, Sweden, SMEs, Financial performance, Financial management, Trade credit use
National Category
Social Sciences
Identifiers
URN: urn:nbn:se:miun:diva-28804DOI: 10.1108/JAMR-09-2015-0067ISI: 000381361400002OAI: oai:DiVA.org:miun-28804DiVA: diva2:971582
Available from: 2016-09-16 Created: 2016-09-16 Last updated: 2016-12-15Bibliographically approved

Open Access in DiVA

No full text

Other links

Publisher's full text

Search in DiVA

By author/editor
Yazdanfar, DarushÖhman, Peter
By organisation
Department of Business, Economics and Law
In the same journal
Journal of Advances in Management Research
Social Sciences

Search outside of DiVA

GoogleGoogle Scholar

Altmetric score

Total: 90 hits
CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf