NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Yifan Li

College of Business
San Francisco State University
San Francisco, CA 94132

E-Mail: EmailAddress: hidden: you can email any NBER-related person as first underscore last at nber dot org
Institutional Affiliation: College of Business, San Francisco State University

NBER Working Papers and Publications

February 2019Do Trade Creditors Possess Private Information? Stock Returns Evidence
with David Hirshleifer, Ben Lourie, Thomas Ruchti: w25553
Theories of customer supplier relationships hold that the private information of suppliers about buyers explains the use of trade credit even when there is a competitive banking sector. If suppliers possess private information about their buyers, then the buyer's order size and ability to pay on time should reflect that information. Using a novel dataset of trade credit relationships, we test whether suppliers have private information about their buyers. Consistent with suppliers possessing private information, we find that the amount of trade credit that a supplier offers to a buyer and the ability of the buyer to pay the trade credit on time are both associated with future buyer abnormal stock returns.
 
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