Common ownership along supply chain and trade credit: Evidence from China

Abstract

This paper explores the impact of common ownership along supply chain on trade credit based on customer-supplier relationships of Chinese listed firms. The results show that common ownership along supply chain can increase the trade credit. This effect is achieved through two channels: alleviating information asymmetry between customers and suppliers and participating in firm decision making. The effect of common ownership along supply chain on improving trade credit is more significant for non-state owned firms in China. This study provides a reference for equity linkages and financial governance in the supply chain.