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Chinese culture, materialism and corporate supply of trade credit

Chinese culture, materialism and corporate supply of trade credit The purpose of this paper is to investigate how cultural value in materialism affects corporate supply of trade credits.Design/methodology/approachUsing a sample of 14,710 firm-year observations of Chinese listed firms from 1998 to 2012, the authors examine the influence of regional materialism on accounts receivable.FindingsThe authors find that listed firms within more materialistic tend to extend less trade credit to their customers, in particular in long-term categories of trade credit. Such negative effects can be significantly mitigated by state control, suggesting the effects are more pronounced in privately controlled listed firms. The negative effects of materialism still hold after controlling for other regional factors, such as trust, GDP per capita or institutional development.Research limitations/implicationsThe authors show materialism as a cultural construct varies across Chinese regions, and it could have important impact on corporate supply of trade credits, besides the previous found effects on consumer use of credit.Originality/valueThis paper expands the literature about the influence of materialism on economic decision making from the individual level to the corporate level. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png China Finance Review International Emerald Publishing

Chinese culture, materialism and corporate supply of trade credit

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Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
2044-1398
DOI
10.1108/cfri-11-2018-0147
Publisher site
See Article on Publisher Site

Abstract

The purpose of this paper is to investigate how cultural value in materialism affects corporate supply of trade credits.Design/methodology/approachUsing a sample of 14,710 firm-year observations of Chinese listed firms from 1998 to 2012, the authors examine the influence of regional materialism on accounts receivable.FindingsThe authors find that listed firms within more materialistic tend to extend less trade credit to their customers, in particular in long-term categories of trade credit. Such negative effects can be significantly mitigated by state control, suggesting the effects are more pronounced in privately controlled listed firms. The negative effects of materialism still hold after controlling for other regional factors, such as trust, GDP per capita or institutional development.Research limitations/implicationsThe authors show materialism as a cultural construct varies across Chinese regions, and it could have important impact on corporate supply of trade credits, besides the previous found effects on consumer use of credit.Originality/valueThis paper expands the literature about the influence of materialism on economic decision making from the individual level to the corporate level.

Journal

China Finance Review InternationalEmerald Publishing

Published: Mar 23, 2020

Keywords: China; Materialism; Chinese culture; M14; G3

References