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Product differentiation, market dynamics and the value relevance of trade payables: Evidence from UK listed firms

Afrifa, G.A., Gyapong, Ernest, Monem, Reza M. (2018) Product differentiation, market dynamics and the value relevance of trade payables: Evidence from UK listed firms. Journal of Contemporary Accounting & Economics, 14 (3). pp. 235-253. ISSN 1815-5669. (doi:10.1016/j.jcae.2018.06.001?) (Access to this publication is currently restricted. You may be able to access a copy if URLs are provided)

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Abstract

This paper provides a comprehensive evidence on how product and market dynamics affect the value relevance of trade payables. Using a sample of 2559 UK listed firms over the period 2005–2014, we find a positive relationship between trade payables and firm performance. Our evidence suggests that trade payables increase (decrease) performance in firms with differentiated products and demand uncertainty (larger market share). We demonstrate that the relative value relevance of bank credit versus suppliers’ credit is dependent on the nature of the product, the level of sales volatility, and market share. We use an innovative approach to assess the robustness of our results to omitted variable bias.

Item Type: Article
DOI/Identification number: 10.1016/j.jcae.2018.06.001?
Uncontrolled keywords: Product differentiation; Market dynamics; Trade payables; Excess return
Subjects: H Social Sciences
Divisions: Faculties > Social Sciences > Kent Business School
Depositing User: Godfred Afrifa
Date Deposited: 12 Jul 2018 09:36 UTC
Last Modified: 29 May 2019 20:43 UTC
Resource URI: https://kar.kent.ac.uk/id/eprint/67602 (The current URI for this page, for reference purposes)
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