Abstract
In this paper we examine a panel of 3272 observations listed publicly in SSE from 2007 to 2010, aiming to study the associations between institutional environment of China, audit opinion and the availability of trade credit. We find that (1) Better institutional environment is advantageous for the listed companies to obtain lower cost mode of trade credit, (2)Compared with the non-standard audit opinions, companies issued by the standard audit opinion are more likely to obtain lower cost of trade credit, (3)In the areas with poorer institutional environment, standard audit opinion is more advantageous to the listed companies for acquiring lower cost mode of trade credit, compared with those in the area with good institutional environment. We conclude that institutional environment and audit opinion have the alternative relationship in cutting the cost of trade credit obtained by firms.
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