The Exploitation of Relationships in Financial Distress: The Case of Trade Credit

Journal of Finance - Tập 55 Số 1 - Trang 153-178 - 2000
Benjamin Stuart Wilner1
1LECG/Navigant Consulting, Evanston, Illinois

Tóm tắt

This paper develops optimal pricing, lending, and renegotiation strategies for companies in relationships where one firm is highly dependent on the other. Long‐term trade—creditor firm relationships induce dependent trade creditors to grant more concessions in debt renegotiations than nondependent creditors. Anticipating these larger renegotiation concessions, not only do less financially stable firms prefer trade credit, but all firms agree to pay a higher interest rate for trade credit. The model also explains the existence of “teaser” interest rates and convenience classes. Findings are consistent with those of the relationship‐lending literature.

Từ khóa


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