Trade Credit, Cash-flow and SMEs in the UK, Germany and France

1997 ◽  
Vol 16 (1) ◽  
pp. 22-35 ◽  
Author(s):  
Francis Chittenden ◽  
Richard Bragg
Keyword(s):  
Cash Flow ◽  
Trade Credit ◽  
The Uk

scholarly journals Net trade credit: what are the determinants?

2017 ◽  
Vol 13 (3) ◽  
pp. 246-266 ◽  
Author(s):  
Godfred Adjapong Afrifa ◽  
Ernest Gyapong
Keyword(s):  
Cash Flow ◽  
Design Methodology ◽  
Trade Credit ◽  
Unobserved Heterogeneity ◽  
Bank Credit ◽  
Sales Growth ◽  
Industry Effects ◽  
Content Type ◽  
Operating Cash Flow ◽  
The Uk

Purpose The purpose of this paper is to extend the literature on trade receivables and trade payables by examining the determinants of net trade credit. Design/methodology/approach To do that, a sample of 67,047 firms in the UK with 443,190 firm year observations is used. Findings The results are robust to unobserved heterogeneity and industry effects. The evidence suggests that firms with more inventories, market share and are financially distressed invest less in trade credit. Moreover, higher operating cash flow, annual sales growth, export propensity, access to bank credit and larger firms lead to higher investment in trade credit. Originality/value Additionally, the paper broadens the scope of the literature by analysing the determinants of net trade credit around the financial crisis and industry competitiveness.

scholarly journals Simulation evidence on the properties of alternative measures of working capital accruals

2017 ◽  
Vol 25 (4) ◽  
pp. 378-394
Author(s):  
Javad Izadi Zadeh Darjezi ◽  
Homagni Choudhury ◽  
Alireza Nazarian
Keyword(s):  
Cash Flow ◽  
Estimation Error ◽  
Explanatory Power ◽  
Cash Flows ◽  
Working Capital ◽  
Accrual Quality ◽  
Content Type ◽  
Explanatory Variables ◽  
Study Results ◽  
The Uk

Purpose This paper aims to investigate the specification and power of tests based on the DD and modified DD model through the UK data between years 2000 and 2013, and make comparisons with tests using working capital accruals creating a measure of accruals quality as the standard deviation of the residuals value from firm-specific regressions base on working capital accruals on last, current and one-year-ahead cash flows from operations. Design/methodology/approach This study focuses both on the DD model and modified DD model to find out which of them can more accurately capture total working capital accrual estimation error and accrual quality. According to the DD model, the past, current and future net cash from operating activities as the three years’ operating cash inflows or outflows become omitted and correlated variables. In this study, the authors continue to document residuals from the DD and MDD models to demonstrate properties that are more consistent with behaviours of accruals estimation errors. Therefore, in this study, the authors are looking to compare the results from both the MDD and DD models and find which one of them is more effective in explaining the working capital accruals in the UK. Findings The authors find that adding additional explanatory variables may add additional explanatory power of variables to the DD model and extent to which accruals map into cash flow insights based on the UK data. This study is empirically well fitting with the internal workings of cash flows. As investors fixate only on the accounting earnings, they may fail to reflect fully on information contained within cash flow components and working capital accruals of current and future earnings. Originality/value The authors compare different equation to cover more items of working capital accruals. In addition, after examining earnings and accrual quality, the findings show that the average UK company behaviour was quite similar to the behaviour that was founded earlier for both models in the USA. Furthermore, this study results show that more volatility of sales, cash flow, accruals and earnings make a lower accrual quality. The results demonstrate that both models can capture the power to predict working capital accruals. Moreover, we find that adding additional explanatory variable of employee growth rate adds additional explanatory variables to DD model.

Artisans, Retailers, and Credit Transactions in the Roman World

2017 ◽  
Vol 5 (1) ◽  
Author(s):  
Cameron Hawkins
Keyword(s):  
Cash Flow ◽  
Trade Credit ◽  
Credit Market ◽  
Access To Credit ◽  
Goods And Services ◽  
Flow Problems ◽  
Roman World ◽  
Tangible Assets

AbstractIn this article, I argue not just that many artisans and retailers in the Roman world were able to finance their businesses only by relying heavily on access to credit, but also that they depended primarily upon trade credit—that is, upon interpersonal credit provided to them by suppliers and subcontractors to whom they were linked by relationships of trust, and from whom they purchased goods and services on account. This was true primarily because most artisans and retailers catered to clients who often lacked ready money when they made purchases, and thus found it necessary to offer shop credit instead of concluding sales in exchange for immediate cash payments. This strategy in turn exacerbated their own cash flow problems and compelled them to incur liabilities that could easily match or exceed the value of their tangible assets. In these circumstances, many found that trade credit was both more accessible than loans procured on the credit market (for which they often lacked the necessary collateral), and also less risky, since suppliers of trade credit could be more forgiving of missed payments than conventional lenders (who were likely to take actions that could result either in seizure of an entrepreneur’s collateral or in his or her insolvency).

scholarly journals Corporate control in Europe

2005 ◽  
Vol 2 (2) ◽  
pp. 65-76 ◽  
Author(s):  
Jeremy Grant ◽  
Thomas Kirchmaier
Keyword(s):  
Small Group ◽  
Cash Flow ◽  
Capital Markets ◽  
Corporate Control ◽  
Effective Control ◽  
Private Benefits ◽  
Control Devices ◽  
The Uk ◽  
Cash Flow Rights ◽  
European Economies

Control devices are a common practice in Europe, used to increase the influence of a dominant shareholder upon the firm beyond his/her cash flow rights. They are often very powerful devices which limit the effective control of corporations to a small group of shareholders, and can be utilized to extract private benefits of control. In this paper, we aim to provide an understanding how these devices work in principal and then examine how they are used in the main Western European economies (France, Italy, Germany, Spain and the UK), in light of the recent changes of legislation and despite improvements in the efficiency of capital markets.

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