Trade Credit Policy and Agency Theory

Meryem Bellouma

Trade Credit Policy and Agency Theory

Meryem Bellouma * §

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Abstract

The study here provides an agency model to explain the offer of trade credit in an asymmetric environment between the suppliers and the customers. Many theories inform traditional arguments focusing on the existence of the trade credit (e.g. tax theory, transaction cost theory, liquidity theory and product quality theory). One theory studies the adverse selection phenomenon but the moral hazard problem needs exploration. The findings indicate that day of sales outstanding of Tunisian export SMEs relates directly to adverse selection and inversely link to moral hazard measured by provision on bad debts and cost ratio. By testing the traditional models, the study does not confirm tax theory, liquidity theory or transaction cost theory. However, the findings support the product quality theory which is based on ex-ante asymmetric information.

References

32 Cites in Article

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Funding

No external funding was declared for this work.

Conflict of Interest

The authors declare no conflict of interest.

Ethical Approval

No ethics committee approval was required for this article type.

Data Availability

Not applicable for this article.

How to Cite This Article

Meryem Bellouma. 2014. "Trade Credit Policy and Agency Theory". Global Journal of Management and Business Research - B: Economic & Commerce GJMBR-B Volume 14 (GJMBR Volume 14 Issue B1).

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Journal Specifications

Crossref Journal DOI 10.17406/GJMBR

Print ISSN 0975-5853

e-ISSN 2249-4588

Keywords

adverse selection Agency theory moral hazard trade credit tunisian export smes

Classification

GJMBR-B Classification JEL Code: E51

E50

Submission ReceivedDecember 14, 2013
Peer Review Double Blind
Handling Editor
Accepted January 4, 2014
Published January 15, 2014

Version of record

v1.2

Issue date

March 25, 2014

Language

English

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Article Matrices

Total Score: 148

Country: Tunisia

Subject: Global Journal of Management and Business Research

Authors: Meryem Bellouma (PhD/Dr. count: 0)

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Publish Date: 2014 01, Wed

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