“The firm’s trade credit risk taking process

Electronic copy available at: http://ssrn.com/abstract=1805227
“The Firm’s Trade Credit Risk Taking Process
A Panel Data Probit Estimation, From European Western Countries” 1 Justino Manuel de Oliveira Marques a
Assistent Professor

a Contact Data: Justino Manuel de Oliveira Marques e-mail: [e-mail] Instituto de Estudos Superiores Financeiros e Fiscais
Avenida Sanatórios, Edifico Heliântia
4405-604 Vila Nova de Gaia
Portugal
Telefono: 00351227538800
Teelfax: 00351227624590 e-mail: [e-mail]

September 2010 1 This is the 2 nd of 4 essays from a Research Project called: “Essays on Corporate Finance Towards (Financial)
Management Efficiency”. Electronic copy available at: http://ssrn.com/abstract=1805227

2
2

“The Firm’s Trade Credit Risk Taking Process
A Panel Data Probit Estimation, From European Western Countries” Abstract: On this investigation it is confirmed the main relevance of firm’s trade credit duration gap ratio when faced to different stages of firm’s income statement represented by gross coverage ratio and net coverage ratio (the higher risk taking probability) and coverage ratio (the lower risk taking probability). It innovatibly ratifies trade credit duration gap ratio as a firm’s trade credit risk taking instrument, instead of the days to pay accounts payable or the days sales outstanding alone and also confirms transactions cost theory with financial predictions, both insert in firm’s financing motives and pricing motives theory. On this issue, there are a very few investigations to analyse the trade credit duration gap ratio itself and none on the trade credit risk taking which is an innovator and useful approach taking into account prior and most recent findings related to each issue of the mentioned trade credit duration