A Strategic Approach on Organizing Accounts Receivable Management: Some Empirical Evidence
Tóm tắt
In this paper, the organizational behavior in managing accounts receivable is studied. It is based on the recent surge of interest in trade credit management from both academics and practitioners emphasizing 1) the rather permanent character of these short-term but continuously renewed investments and 2) their strategic potential due to the existence of financial, tax-based, operating, transaction and pricing motives. The paper focuses on a search for sources of such a strategic value and for the determinants of its risk. More specifically this potential strategic value is said to create a need for flexibility and control in managing accounts receivable. It will therefore induce a need for internalization of its management. The resulting risks, however, favor its externalization. This results in a revision of the existing decision-making processes since, the extension of trade credit becoming a strategic asset, investments in accounts receivable cannot be judged by the financial needs incurred as measured by the traditional DSO-rate anymore. More specifically, a transaction cost theoretic approach is used to explain the decision whether or not to internalize the firm's accounts receivable management and its risk, resulting in a set of hypotheses to be tested on a sample of both large and medium-sized Belgian companies.
Tài liệu tham khảo
Anderson, Erin and Barton A. Weitz: 1986, “Make-or-Buy. Decisions Vertical Integration and Marketing Productivity”, Sloan Management Review 27(3): 3–20.
Asselbergh, Margareta: 1996, Een Onderzoek naar de Determinanten van het Debiteurenbeheer in Ondernemingen: Een Financieel-economische versus Transactiekostentheoretische Benadering, met Toetsing op de Uitbestedingsbeslissing. Ph.D. dissertation (Belgium: RUCA, University of Antwerp).
Brandenberg, Mary: 1987, “Why Don't They Use Factoring?”, Accountancy 99: 101–102.
Brick, Ivan E. and William K.H. Fung: 1984a, “Taxes and the Theory of Trade Debt”, The Journal of Financial Management 39(4): 1169–1176.
Brick, Ivan E. and William K.H. Fung: 1984b, “The Effect of Taxes on the Trade Credit Decision”, Financial Management 13(2): 24–31.
Chant, E.M. and D.A. Walker: 1988, “Small Business Demand for Trade Credit”, Applied Economics 20(7): 861–876.
Coase, R.H.: 1991, “The Nature of the Firm”, in O. Williamson and S. Winter (eds.), The Nature of the Firm: Origins, Evolution and Development (New York: Oxford University Press).
Copeland, Thomas E. and Nabil T. Khoury: 1980, “A Theory of Credit Extensions with Default Risk and Systematic Risk”, The Engineering Economist 26(1): 35–52.
Deloof, M. and M. Jegers: 1996, “Trade Credit, Product Quality, and Intragroup Trade: Some European Evidence”, Financial Management 25: 33–43.
Emery, G.W.: 1987, “An Optimal Financial Response to Variable Demand”, Journal of Financial and Quantitative Analysis 22(2): 209–225.
Emery, Gary W.: 1984, “A Pure Financial Explanation for Trade Credit”, Journal of Financial and Quantitative Analysis 19(3): 271–285.
Emery, Gary W. and Nandkumar Nayar: 1994, “Product Quality and Payment Policy”, unpublished paper. University of Oklahoma (June).
Emery, Gary W.: 1988, “Positive Theories of Trade Credit”, in Y.H. Kim and V Srinivasan (eds.), Advances in Working Capital Management, Vol. 1 (London: JAI Press Inc.).
Frank, Murray and Vojislav Maksimovic: 1995, “Why Is Most Commercial Trade on Credit”, unpublished paper (26 July), 20 p.
Grass, Martin: 1972, Control of Working Capital, A Programme of Management Priorities (Essex: Gower Press).
Hart, Oliver D.: 1991, “Incomplete Contracts and the Theory of the Firm”, in O. Williamson and S. Winter (eds.), The Nature of the Firm: Origins, Evolution and Development (New York: Oxford University Press).
Hay, D.A., and H. Louri: 1989, “Firms as Portfolios: A Mean-Variance Analysis of Unquoted UKCompanies”, The Journal of Industrial Economics 38(2): 141–165.
Jegers, Marc and Willem Buijinck: 1987, “The Reliability of Financial Accounting Data Bases: Some Belgian Evidence”, International Journal of Accounting: Education and Research 23(1): 1–21.
Jones, Gareth and Charles W.L. Hill: 1988, “Transaction Cost Analysis of Strategy-Structure Choice”, Strategic Management Journal 9: 159–172.
Klein, Benjamin: 1991, “Vertical Integration as Organizational Ownership: The Fisher-Body-General Motors Relationship Revisited”, in O. Williamson and S. Winter (eds.), The Nature of the Firm: Origins, Evolution and Development (New York: Oxford University Press).
Lee, Yul W. and John D. Stowe: 1993, “Product Risk, Asymmetric Information and Trade Credit”, Journal of Financial and Quantitative Analysis 28(2): 281–300.
Lefebvre, Christian and John Flower: 1994, European Financial Reporting: Belgium (London: Routledge).
Long, Michael S., Ileen B. Malitz and S. Abraham Ravid: 1993, “Trade Credit, Quality Guarantees, and Product Marketability”, Financial Management 22(4): 117–127.
Mian, Shehzad and Clifford W. Smith Jr.: 1992, “Accounts Receivable Management Policy: Theory and Evidence”, The Journal of Finance 47(1): 169–201.
Nobes, Christopher and Robert Parker: 1991, Comparative International Accounting, third edition (London: Prentice Hall International).
Petersen, M.A. and R.G. Rajan: 1997, “Trade Credit: Theories and Evidence”, Review of Financial Studies 10: 661–691.
Schiff, M. and Z. Lieber: 1974, “A Model for the Integration of Credit and Inventory Management”, Journal of Finance 29: 133–140.
Schwartz, R.A. and David K. Whitcomb: 1979, “The Trade Credit Decision”, in I. Bicksler (ed.), Handbook of Financial Economics (Amsterdam: North Holland Publishing Company).
Schwartz, R.A.: 1974, “An Economic Model of Trade Credit”, Journal of Financial and Quantitative Analysis 3: 643–657.
Schwartz, R.A. and David K. Whitcomb: 1978, “Implicit Transfers in the Extension of Trade Credit”, in Boulding and Wilson (eds.), Redistribution through the Financial System: The Grants Economics of Money and Credit (New York: Praeger).
Shannon C.E. and W. Weaver: 1963, The Mathematical Theory of Communication (Urbana: The University of Illinois Press).
Smith, Janet K. and Christjahn Schnucker: 1994, “An Empirical Examination of Organizational Structure: The Economics of the Factoring Decision”, Journal of Corporate Finance 1(1): 119–138.
Summers, Barbara and Nicholas Wilson: 1997, “Motives for the Use of Third Parties in Credit Management: A Theoretical Review with Some Empirical Findings for Factoring”, unpublished paper. UK: University of Bradford Management Centre.
Williamson, Oliver E.: 1975, Markets and Hierarchies: Analysis and Antitrust Implications: A study in the Economics of Internal Organization (New York: The Free Press).
Williamson, Oliver E.: 1987, “The Economics of Organization”, American Journal of Sociology 87(3): 548–577.