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Securitization and trade credit

Christopher R Harris, University of Nebraska - Lincoln

Abstract

The first essay studies the relationship between a firm's use of receivables securitization and the resulting trade credit policy. Additionally, I compare the effects based on the competitive nature of the industry. I find that the ability to sell accounts receivable generated from trade credit is positively related to the amount of trade credit a firm offers. Additionally, I find a firm's ability to offer additional trade credit through the use of a securitization facility is positively related to firm sales and market share growth in competitive industries. Moreover, the use of a securitization facility is positively related to shareholder value for firms lacking market power within competitive industries. ^ The second essay studies the use of receivables securitization among non-financial firms, and how the motivation for use may vary based on the nature of goods a firm sells. I find that firms selling differentiated goods and services utilize the securitization facility to increase trade credit, while firms selling standardized goods use the facility as a way to lower balance sheet debt. I additionally compare these results before and after implementation of FIN 46. I find the relation between securitization and trade credit is positive and significant before and after FIN 46, while the relation between securitization and debt is negative only prior to FIN 46.^

Subject Area

Business Administration, Accounting|Economics, Finance

Recommended Citation

Harris, Christopher R, "Securitization and trade credit" (2013). ETD collection for University of Nebraska - Lincoln. AAI3558857.
http://digitalcommons.unl.edu/dissertations/AAI3558857

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