Firm life cycle and trade credit

Mostafa Hasan, Adrian (Wai-Kong) Cheung, Lidia Tunas, Hung Wan Kot

Research output: Contribution to journalArticlepeer-review


This study investigates the relation between firm life cycle and trade credit. We find evidence that firms in the introduction, growth, and decline stages use significantly more trade credit, whereas firms in the mature stage use significantly less trade credit. Firm life cycle works as a separate channel to affect trade credit independently from other channels proposed in the literature. These results are robust to alternative regression specifications, alternative measures of life cycle and trade credit, and the endogeneity concern. Firms in the introduction and decline stages adjust trade credit to the target level quickly compared to others.
Original languageEnglish
Number of pages29
JournalThe Financial Review
Early online date29 Apr 2021
Publication statusE-pub ahead of print - 29 Apr 2021

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