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Do trade credits finance long-term investments?
Our model indicates that European firms across all size categories use trade credits to purchase 6%–15% of tangible fixed assets and 14%–30% of intangible assets in the short-run. A long-run target adjustment model shows that large firms eventually replace most of this temporary trade credit financi...
Autores principales: | , |
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Formato: | Online Artículo Texto |
Lenguaje: | English |
Publicado: |
Elsevier
2023
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Materias: | |
Acceso en línea: | https://www.ncbi.nlm.nih.gov/pmc/articles/PMC10539918/ https://www.ncbi.nlm.nih.gov/pubmed/37780750 http://dx.doi.org/10.1016/j.heliyon.2023.e20448 |
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author | Bartholdy, Jan Olson, Dennis |
author_facet | Bartholdy, Jan Olson, Dennis |
author_sort | Bartholdy, Jan |
collection | PubMed |
description | Our model indicates that European firms across all size categories use trade credits to purchase 6%–15% of tangible fixed assets and 14%–30% of intangible assets in the short-run. A long-run target adjustment model shows that large firms eventually replace most of this temporary trade credit financing with cheaper sources of funds. However, even in the long-run, small firms finance 4%–6% of tangible fixed asset purchases and 5%–10% of intangible fixed asset purchases using trade credit. Since smaller firms do not have the same access to bank credit as larger firms, trade credit is used to fund long-term investments Trade credit is therefore a key component in the capital structure decisions of smaller firms and it should be included in their weighted-average cost of capital calculations. |
format | Online Article Text |
id | pubmed-10539918 |
institution | National Center for Biotechnology Information |
language | English |
publishDate | 2023 |
publisher | Elsevier |
record_format | MEDLINE/PubMed |
spelling | pubmed-105399182023-09-30 Do trade credits finance long-term investments? Bartholdy, Jan Olson, Dennis Heliyon Research Article Our model indicates that European firms across all size categories use trade credits to purchase 6%–15% of tangible fixed assets and 14%–30% of intangible assets in the short-run. A long-run target adjustment model shows that large firms eventually replace most of this temporary trade credit financing with cheaper sources of funds. However, even in the long-run, small firms finance 4%–6% of tangible fixed asset purchases and 5%–10% of intangible fixed asset purchases using trade credit. Since smaller firms do not have the same access to bank credit as larger firms, trade credit is used to fund long-term investments Trade credit is therefore a key component in the capital structure decisions of smaller firms and it should be included in their weighted-average cost of capital calculations. Elsevier 2023-09-26 /pmc/articles/PMC10539918/ /pubmed/37780750 http://dx.doi.org/10.1016/j.heliyon.2023.e20448 Text en © 2023 The Authors. Published by Elsevier Ltd. https://creativecommons.org/licenses/by-nc-nd/4.0/This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/). |
spellingShingle | Research Article Bartholdy, Jan Olson, Dennis Do trade credits finance long-term investments? |
title | Do trade credits finance long-term investments? |
title_full | Do trade credits finance long-term investments? |
title_fullStr | Do trade credits finance long-term investments? |
title_full_unstemmed | Do trade credits finance long-term investments? |
title_short | Do trade credits finance long-term investments? |
title_sort | do trade credits finance long-term investments? |
topic | Research Article |
url | https://www.ncbi.nlm.nih.gov/pmc/articles/PMC10539918/ https://www.ncbi.nlm.nih.gov/pubmed/37780750 http://dx.doi.org/10.1016/j.heliyon.2023.e20448 |
work_keys_str_mv | AT bartholdyjan dotradecreditsfinancelongterminvestments AT olsondennis dotradecreditsfinancelongterminvestments |