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Corporate social responsibility on trade credit financing capacity: Facilitation or inhibition?

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  • Cai, Hui
  • Huang, Yuhong

Abstract

Corporate social responsibility and trade credit financing are increasingly emphasized by investors and management. Using data from Chinese A-share private listed companies from 2010 to 2021, this paper finds that CSR practices significantly enhance trade credit financing capacity, with this effect being more pronounced in enterprises located in regions with favorable commercial credit environments and samples of firms with high-quality disclosure. Furthermore, we identify three potential mechanisms: improving internal control quality, reducing operational risk, and enhancing supplier relationship stability. The findings underscore the important role of CSR in improving corporate financing ability and provide valuable insights for management practices.

Suggested Citation

  • Cai, Hui & Huang, Yuhong, 2024. "Corporate social responsibility on trade credit financing capacity: Facilitation or inhibition?," Finance Research Letters, Elsevier, vol. 69(PA).
    • Handle: RePEc:eee:finlet:v:69:y:2024:i:pa:s1544612324011036
    DOI: 10.1016/j.frl.2024.106073
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    Keywords

    Corporate social responsibility; Trade credit; Stakeholders; Internal control quality; Business risk;
    All these keywords.

    JEL classification:

    • A10 - General Economics and Teaching - - General Economics - - - General
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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