Abstract
This article presents new evidence on the practice of financial delinquency of trade credits. The low level of punctuality in payments to suppliers can negatively affect the liquidity of the lender and be transmitted to all companies in the value chain, creating uncertainties in the business environment. The aim is to identify and analyse the factors responsible for delay in payment to suppliers. A survey with 554 brazilian companies located in the provinces of Minas Gerais and São Paulo enable application of the model of ordered logit regression analysis. The dependent variable is the financial delinquency level of companies that do or do not delay the payment of duties, and the independent variables are the demographic, financial, and operational inherent demand for financing and moral hazard. The results show that companies with more short-term debts, beginner on its business activities, and that have a higher proportion of customers who pay their credit purchase on time are more likely to delay their obligations to suppliers.
Highlights
IntroductionThe delay of payments in commercial transactions between companies is not a recent phenomenon in the real economy, and it can have a negative impact on the performance of companies that grant the trade credit (TC),and on the reputation of the offenders (PETERSEN; RAJAN, 1994) and the confidence level of the business environment
The delay of payments in commercial transactions between companies is not a recent phenomenon in the real economy, and it can have a negative impact on the performance of companies that grant the trade credit (TC),and on the reputation of the offenders (PETERSEN; RAJAN, 1994) and the confidence level of the business environment. This event is the realization of hidden action of asymmetric information (AKERLOF, 1970) in contracts
Choice models are developed from economic theories of random utility, where classification models are developed by minimising classification errors with respect to the x’s and categorical levels y
Summary
The delay of payments in commercial transactions between companies is not a recent phenomenon in the real economy, and it can have a negative impact on the performance of companies that grant the trade credit (TC),and on the reputation of the offenders (PETERSEN; RAJAN, 1994) and the confidence level of the business environment. This event is the realization of hidden action of asymmetric information (AKERLOF, 1970) in contracts. The TC contracts embed aspects of agency theory as asymmetric information and moral hazard (AKERLOF, 1970; JENSEN; MECKLING, 1976) and transactions cost (WILLIAMSON, 1979) inherent in loan demand
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