TRADE CREDIT AND STOCK PRICE INFORMATIVENESS
Keywords:
Stock price informativeness; trade credit; information environment, corporate governance, emerging markets
Abstract
This paper investigates the relation between trade credit use and stock price informativeness. Using a comprehensive data set for stocks listed in 10 emerging markets from 2000 to 2019, I find that trade credit is positively correlated with stock price informativeness. This finding is consistent with the argument that trade credit helps enhance firm information environment and improve corporate governance. Consequently, more firm-specific information is available to the market and stock prices are more informative.