Taxes and the Theory of Trade Debt

IVAN E. BRICK, WILLIAM K.H. FUNG

Research output: Contribution to journalArticlepeer-review

38 Scopus citations

Abstract

In this paper, we show that taxes motivate the flow of trade credit without involving the assumption of credit market imperfections. The direction of trade credit flow depends on the distribution of marginal tax rates among buyers and sellers. In equilibrium, the trade credit decision follows a tax‐induced clientele on both the supply and demand side. 1984 The American Finance Association

Original languageEnglish (US)
Pages (from-to)1169-1176
Number of pages8
JournalJournal of Finance
Volume39
Issue number4
DOIs
StatePublished - Sep 1984

All Science Journal Classification (ASJC) codes

  • Accounting
  • Finance
  • Economics and Econometrics

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