Does industry-specific information disclosure improve trade credit financing?

Abstract

This paper examines the influence of the staggered implementation of the Industry Information Disclosure Guidelines on trade credit financing. Using a sample of China’s A-share listed firms from 2007 to 2019, I show that firms obtain significantly more trade credit from their suppliers when they disclose industry-specific information. The main results are robust to numerous additional checks. The positive association is more pronounced when the firm’s financing constraints are stronger, the concentration of suppliers is lower, and the level of social trust and the degree of marketization are higher. Furthermore, this paper finds that the positive association is more pronounced for firms with weaker information transparency and corporate governance, indicating that the Guidelines play a role through the information effect and governance effect. The study enriches the research on the economic consequences of industry-specific information disclosure and the factors affecting trade credit financing.