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Supplier Financing and Earnings Quality

2014; Wiley; Volume: 41; Issue: 9-10 Linguagem: Inglês

10.1111/jbfa.12090

1468-5957

Pedro J. García‐Teruel, Pedro Martínez Solano, Juan Pedro Sánchez‐Ballesta,

Corporate Taxation and Avoidance

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.