Social Corruption, Firms' Operating Conditions And Trade Credit Financing

In China, commercial prepaid cards have become a form of social corruption, which results in the increase of trade credit financing of retail industry. Based on the empirical analysis of panel data, which comes from the listed companies of retail industry from 2006 to 2013, the article studies not only the relationship between the social corruption and the trade credit financing of the companies, but the relationship between the operating conditions of the companies and their trade credit financing as well. Research shows in Mainland Area the social corruption and the trade credit financing levels positively correlated, and verifies the existence of social corruption is closely related to the prepaid card. Meanwhile, the operating conditions are not entirely related to its trade credit financing. By contrast, based on the analysis of data for the same period in Hong Kong 14 companies of the retail industry, the trade credit financing level is more dependent on their operating conditions, but no significant relationship with social corruption. The empirical analysis of data for the same period in American 16 companies of the reta il industry confirms that companies' operating conditions play an important role in their trade credit financing and the contribution of social corruption is abnormal in the perfect financial system and mature business environment. In addition, the social corruption contributes 5.5 percentage points to the growth of the trade credit financing in Mainland Area.At the end, practical advices are put forward based on the results above. O n the one hand, the retail companies' managers should focus on controlling cash, strengthening the relationship with the suppliers, active prepaid card marking and good cooperation with bank. On the other hand, the investors should concern on the real growth of the retail companies' sales and alert the abnormal prosperity.