Abstract
The finance literature presents credit purchases as an important source of funding to buyers. It has even been demonstrated to be in use in financing physical investments. Some studies argue that managers, concerned with wealth maximization should, in fact, finance physical investments via trade credit because it limits the use of funds for private benefits and hence reduces agency costs. Accordingly, the aim of this study is to examine financing preferences toward trade credit borrowing in family firms, using publicly traded firm data from Turkey. We also examine its use in financing capital expenditures by comparing family and non-family firms. The sample includes 173 non-financial firms and covers the period 2006-2019. The comparison of family and non-family firms reveals no significant differences in the use of trade credit, however, a negative and statistically significant association between investment and the usage of trade credit is found.
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