Abstract
Following an innovative approach, the effects of financial report quality on the use of trade credit in small and medium-sized enterprises (SMEs) are examined. This effect is considered in a direct and indirect way. Firstly, we analyze whether SMEs with low-quality information are more likely to use trade credit as a financial resource. Secondly, we investigate whether the relationship between trade credit and bank credit in SMEs is moderated by the quality of financial reports. For the empirical analysis, we use a sample of Spanish SMEs over the period 2004 to 2011, and apply a panel data model with fixed effects. The findings suggest that firms with low-quality financial reporting use more trade credit. Furthermore, the influence of bank credit on trade credit is found to be partially moderated by audit opinion.
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