Corporate social responsibility and trade credit

  • Hongkang Xu
  • Jia Wu
  • Mai DaoEmail author
Original Research


Prior studies show that higher corporate social responsibility (CSR) performance lowers firms’ cost of debt and equity financing. Using a sample of 16,463 U.S. firm-year observations that represent more than 2455 individual firms over the 1996–2016 period, we investigate the relation between all aspects of CSR and trade credit. We provide strong and robust evidence that higher overall CSR scores are related to a higher level of trade credit. A further examination reveals positive associations between trade credit and the four CSR individual components (i.e., the environment, employee relations, community, and diversity). Taken together, our results highlight the important signaling role that CSR plays in increasing the suppliers’ willingness to extend trade credit. Our study also has an important supply chain implication that emphasizes the role of CSR in designing contracts between buyers and suppliers and the level of trade credit for buyer firms with CSR investments.


Corporate social responsibility Trade credit Signaling theory Supply chain 

JEL Classification

D25 G32 M40 



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Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2019

Authors and Affiliations

  1. 1.Accounting and Finance DepartmentUniversity of Massachusetts DartmouthDartmouthUSA
  2. 2.The Department of AccountingThe University of ToledoToledoUSA

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