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Board Connections and Trade Credit

  • Xiaoyu Cui
  • , Yangyang Fan
  • , Baolei Qi
  • , Guochang Zhang
  • School of Economics and Management
  • China University of Petroleum (East China)
  • PolyU Business School
  • Hong Kong Polytechnic University
  • Xi’an Jiaotong University
  • The University of Hong Kong
  • The University of Hong Kong

Research output: Contribution to journal › Article › peer-review

1 Scopus citations

Abstract

We investigate the relationship between board connections and firms’ access to trade credit. Using a comprehensive sample of United States firms from 2000 to 2017, we find that those with more linkages with outside boards are associated with greater access to trade credit (e.g., a higher proportion of accounts payable to cost of goods sold). The finding persists in a battery of tests that mitigate endogeneity concerns and enhance robustness. Furthermore, this positive relationship is especially salient for firms with strong liquidity needs in ongoing operations, firms with opaque information environments, and firms with high profitability. This study sheds light on how boardroom networks facilitate firms’ routine transactions and informal financing.

Original languageEnglish
Pages (from-to)143-160
Number of pages18
JournalAccounting Horizons
Volume40
Issue number3
DOIs
StatePublished - Sep 2026
Externally publishedYes

Keywords

  • board connections
  • social networks
  • trade credit

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