Access to public capital markets and the extension of trade credit: An empirical analysis of Korean public and private firms

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Abstract

Using a large dataset of Korean public and private firms, we show that public listing does not influence the supply of trade credit among firms affiliated with a large business group (chaebol). Meanwhile, non-affiliated public firms provide more trade credit to customers than their private counterparts. Public listing allows non-affiliated firms to have greater access to cheaper sources of external capital, thereby increasing the supply of trade credit. However, the results for chaebol-affiliated firms may be attributed to well-functioning internal capital markets. Our results shed light on the substitution between internal and external capital markets.

Original languageEnglish
Article number102484
JournalFinance Research Letters
Volume46
DOIs
StatePublished - May 2022

Keywords

  • Business group affiliation
  • Private firms
  • Public firms
  • Public listing
  • Trade credit

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