Who pays buyers for not disclosing supplier lists? Unlocking the relationship between supply chain transparency and trade credit

Abstract

Although previous studies have explored the financial benefits of improved supply chain transparency, in practice, firms extensively conceal their information. The existing literature pays very limited attention to how a firm’s supply chain transparency affects the financial support from suppliers. Grounded on social exchange theory, this study explores the reciprocal relationship between a firm’s supply chain transparency and its suppliers’ provision of trade credit in the context of supplier list disclosures. Based on tests of Chinese listed firms, we find that a firm with lower supply chain transparency can enjoy more trade credit. We further observe that this negative relationship is attenuated by a firm’s market share but strengthened by a firm’s corporate social responsibility (CSR) performance. These findings contribute to an improved understanding of the combined effects of reciprocity and bargaining power on trade credit. Our results also provide a new rationale for a firm to conceal supplier identities.