The Impact Of Trade Credit On Corporate Performance

Trade credit is an important form of financing for businesses in a broad range of industries and economies.Even in the United States,with its extremely well-developed financial markets,trade credit is the largest single source of shortterm financing.In less-developed countries,where formal lenders are scarce at best,trade credit are expected to play an even more significant role in funding firms' activities.In this paper,we try to find out the effect of trade credit on corporate performance and the moderating effect of the interlocking directorates' network structure on the relationship between trade credit and corporate performance.The purpose of this paper is to retard the financing difficulties caused by information asymmetry from the perspective of social networks so that the corporate performance will be improved.This paper first reviews the concept of trade credit and the characteristics of interlocking directorates' network structure and its related theories,including trade credit supply motivation and demand theory.In addition,we also reviews the literature on trade credit and corporate performance,trade credit and interlocking directorates network.To better understanding the research hotspots and front of interlocking directorates,we use the CiteSpace visual analysis tool.On the basis of the references,the research hypothesis and conceptual model are put forward.This paper studies the impact of trade credit on corporate performance from the aspects of trade credit supply and trade credit receivable,and takes the characteristics of interlocking directorates' network structure as the modertaing variable.The results show that trade credit receivable is positively related to corporate performance,and the network structure of interlocking directorates plays a significant role in moderating the relationship between trade credit and corporate performance.Based on the research results,this paper puts forward some suggestions on the improvement of commercial credit system,the reform of financial system and the appointment of chain directors at the state and enterprise level.