Determinants of corporate trade credit - A study on Ho Chi Minh stock exchange (HOSE)

Abstract

Corporate trade credit has been focused by academics over the last decades. There are various studies covering this topic in developed market such as US and European countries. However, the focus in developing market is still in short. Hence, this study aims to contribute to the interest by examining the determinants of corporate trade credit among non-financial listed firms on Ho Chi Minh Stock Exchange. This market is employed because of the interesting positive outlook on VN-Index with the consideration of fastest growing index in ASEAN. Specifically, this thesis aims on the relationships of financial statement items to two separate measurement of trade credit including accounts receivable and accounts payable. The study employs the dataset of financial items from 104 listed firms’ financial statement within the period of 2009-2013. The outcomes imply that only debt level has statistical impact on both terms of trade credit while the two models indicates different results for the remaining financial factors. In particular, firm size, sale growth and asset turnover are the possible determinants of accounts receivable while the two financial indicators only correlating with accounts payable are profitability and current asset level.