The influence of corporate social responsibility disclosure on trade credit: A study of Vietnamese listed firms in the HOSE


Authors

  • Nguyen Van Ha Foreign Trade University
DOI: https://doi.org/10.57110/vnu-jeb.v4i3.338

Keywords:

Corporate social responsibility, trade credit, HOSE, Vietnam

Abstract

This study examines the influence of corporate social responsibility disclosure on trade credit of firms listed on the HOSE. Data on corporate social responsibility disclosure are manually obtained from annual reports over the period 2010 - 2020. And corporate trade credit and other financial data are collected from Fiinpro. Analyzing a dataset of 2,253 observations, the multivariate regression analysis shows that firms with higher levels of corporate social responsibility disclosure are less likely to use trade credit. This trend may stem from the relative higher cost associated with trade credit financing compared to alternative financing options. This result is qualitatively unchanged in robustness checks, including endogeneity controls. Moreover, the inverse relationship between corporate social responsibility and trade credit is more pronounced among smaller firms. This finding indicates that better corporate social responsibility disclosure enables smaller firms to be less dependent on trade credit.

References

Ali, W., Frynas, J. G., & Mahmood, Z. (2017). Determinants of corporate social responsibility (CSR) disclosure in developed and developing countries: A literature review. Corporate Social Responsibility and Environmental Management, 24(4), 273-294. https://doi.org/10.1002/csr.1410

Barrot, J. N. (2016). Trade credit and industry dynamics: Evidence from trucking firms. The Journal of Finance, 71(5), 1975-2016. https://doi.org/10.1111/jofi.12399

Baumann-Pauly, D., Wickert, C., Spence, L. J., & Scherer, A. G. (2013). Organizing corporate social responsibility in small and large firms: Size matters. Journal of Business Ethics, 115, 693-705. https://doi.org/10.1007/s10551-013-1827-7

Beck, T., & Demirguc-Kunt, A. (2006). Small and medium-size enterprises: Access to finance as a growth constraint. Journal of Banking & Finance, 30(11), 2931-2943. https://doi.org/10.1016/j.jbankfin.2006.05.009

Benlemlih, M., Shaukat, A., Qiu, Y., & Trojanowski, G. (2018). Environmental and social disclosures and firm risk. Journal of Business Ethics, 152, 613-626. https://doi.org/10.1007/s10551-016-3285-5

Ben-Amar, W., & Belgacem, I. (2018). Do socially responsible firms provide more readable disclosures in annual reports? Corporate Social Responsibility and Environmental Management, 25(5), 1009-1018. https://doi.org/10.1002/csr.1516

Blundell, R., & S. Bond. (1998). Initial conditions and moment restrictions in dynamic panel data models. Journal of Econometrics, 87, 115–143. https://doi.org/10.1016/S0304-4076(98)00009-8

Chen, Y. C., Hung, M., & Wang, Y. (2018). The effect of mandatory CSR disclosure on firm profitability and social externalities: Evidence from China. Journal of Accounting and Economics, 65(1), 169-190. https://doi.org/10.1016/j.jacceco.2017.11.009

Christensen, D. M. (2016). Corporate accountability reporting and high-profile misconduct. The Accounting Review, 91(2), 377-399.

https://doi.org/10.2308/accr-51146

Clarkson, M. E. (1995). A stakeholder framework for analyzing and evaluating corporate social performance. Academy of Management Review, 20(1), 92-117. https://doi.org/10.5465/amr.1995.9503271994

Damle, H., & Sinha, R. K. (2023). Strategic deviance and trade credit. International Journal of Managerial Finance, 19(4), 831-852. https://doi.org/10.1108/IJMF-08-2022-0381

Derrien, F., Kecskés, A., & Mansi, S. A. (2016). Information asymmetry, the cost of debt, and credit events: Evidence from quasi-random analyst disappearances. Journal of Corporate Finance, 39, 295-311. https://doi.org/10.1016/j.jcorpfin.2016.02.002

Dhaliwal, D. S., Li, O. Z., Tsang, A., & Yang, Y. G. (2011). Voluntary nonfinancial disclosure and the cost of equity capital: The initiation of corporate social responsibility reporting. The Accounting Review, 86(1), 59-100. https://doi.org/10.2308/accr.00000005

Dhaliwal, D. S., Radhakrishnan, S., Tsang, A., & Yang, Y. G. (2012). Nonfinancial disclosure and analyst forecast accuracy: International evidence on corporate social responsibility disclosure. The Accounting Review, 87(3), 723-759. https://doi.org/10.2308/accr-10218

Fifka, M. S. (2013). Corporate responsibility reporting and its determinants in comparative perspective–a review of the empirical literature and a meta-analysis. Business Strategy and the Environment, 22(1), 1-35. https://doi.org/10.1002/bse.729

Frankel, R., & Li, X. (2004). Characteristics of a firm's information environment and the information asymmetry between insiders and outsiders. Journal of Accounting and Economics, 37(2), 229-259. https://doi.org/10.1016/j.jacceco.2003.09.004

Freeman, R. E. (1984). Strategic Management: A Stakeholder Approach. Boston: Pitman.

Friedman, M. (1970). The social responsibility of business is to increase its profits. The New York Times Magazine (September, 13). https://doi.org/10.1093/oxfordhb/9780199215350.003.0012

Gamerschlag, R., Möller, K., & Verbeeten, F. (2011). Determinants of voluntary CSR disclosure: mpirical evidence from Germany. Review of Managerial Science, 5, 233-262. https://doi.org/10.1007/s11846-010-0052-3

Gonçalves, T., Gaio, C., & Costa, E. (2020). Committed vs opportunistic corporate and social responsibility reporting. Journal of Business Research, 115, 417-427. https://doi.org/10.1016/j.jbusres.2020.01.008

Gray, R., Kouhy, R., & Lavers, S. (1995). Corporate social and environmental reporting: A review of the literature and a longitudinal study of UK disclosure. Accounting, Auditing & Accountability Journal, 8(2), 47-77. https://doi.org/10.1108/09513579510146996

Hasan, M. M., & Alam, N. (2022). Asset redeployability and trade credit. International Review of Financial Analysis, 80, 102024. https://doi.org/10.1016/j.irfa.2022.102024

Hendijani Zadeh, M., Naaman, K., & Sahyoun, N. (2023). Corporate social responsibility transparency and trade credit financing. International Journal of Accounting & Information Management, 31(2), 247-269. https://doi.org/10.1108/IJAIM-05-2022-0099

Jian, J., He, K., Liu, Y., & Sun, Y. (2024). Corporate social responsibility: Opportunistic behavior under earnings management? Asia-Pacific Journal of Accounting & Economics, 31(2), 247-268. https://doi.org/10.1080/16081625.2023.2170891

Khan, A., Muttakin, M. B., & Siddiqui, J. (2013). Corporate governance and corporate social responsibility disclosures: Evidence from an emerging economy. Journal of Business Ethics, 114, 207-223. https://doi.org/10.1007/s10551-012-1336-0

KPMG (2023). Road to readiness. KPMG ESG Assurance Maturity Index 2023. <https://assets.kpmg.com/content/dam/kpmg/xx/pdf/2023/09/esg-maturity-report-2023.pdf> Accessed 01/04/2024.

Li, X., Ng, J., & Saffar, W. (2021). Financial reporting and trade credit: Evidence from mandatory IFRS adoption. Contemporary Accounting Research, 38(1), 96-128. https://doi.org/10.1111/1911-3846.

Liu, W., Shao, X., De Sisto, M., & Li, W. H. (2021). A new approach for addressing endogeneity issues in the relationship between corporate social responsibility and corporate financial performance. Finance Research Letters, 39, 101623. https://doi.org/10.1016/j.frl.2020.101623

Lu, L. Y., Shailer, G., & Yu, Y. (2017). Corporate social responsibility disclosure and the value of cash holdings. European Accounting Review, 26(4), 729-753. https://doi.org/10.1080/09638180.2016.1187074

Lys, T., Naughton, J. P., & Wang, C. (2015). Signaling through corporate accountability reporting. Journal of Accounting and Economics, 60(1), 56-72. https://doi.org/10.1016/j.jacceco.2015.03.001

Ma, B., He, J., Yuan, H., Zhang, J., & Zhang, C. (2022). Corporate social responsibility and trade credit: The role of textual features. Journal of Electronic Business & Digital Economics, 2(1), 89-109. https://doi.org/10.1108/JEBDE-07-2022-0018

Mabenge, B. K., Ngorora-Madzimure, G. P. K., & Makanyeza, C. (2022). Dimensions of innovation and their effects on the performance of small and medium enterprises: The moderating role of firm’s age and size. Journal of Small Business and Entrepreneurship, 34(6), 684-708. https://doi.org/10.1080/08276331.2020.1725727

Nekhili, M., Nagati, H., Chtioui, T., & Rebolledo, C. (2017). Corporate social responsibility disclosure and market value: Family versus nonfamily firms. Journal of Business Research, 77, 41-52. https://doi.org/10.1016/j.jbusres.2017.04.001

Nguyen, V. H., Agbola, F. W., & Choi, B. (2019). Does corporate social responsibility reduce information asymmetry? Empirical evidence from Australia. Australian Journal of Management, 44(2), 188-211. https://doi.org/10.1111/auar.12347

Nguyen, V. H., Le T. T., Vu, H. G., Tran, M. T., & Nguyen, T. Y. (2022). Corporate social responsibility and cash holdings: Empirical evidence from Vietnam. Journal of Economics and Development (303), 24-33. https://js.ktpt.edu.vn/index.php/jed/article/view/592

Petersen, M. A. (2009). Estimating standard errors in finance panel data sets: Comparing approaches. Review of Financial Studies, 22(1), 435–480. https://dx.doi.org/10.2139/ssrn.661481

Raimo, N., Caragnano, A., Zito, M., Vitolla, F., & Mariani, M. (2021). Extending the benefits of ESG disclosure: The effect on the cost of debt financing. Corporate Social Responsibility and Environmental Management, 28(4), 1412-1421. https://doi.org/10.1002/csr.2134

Tian, H., & Tian, G. (2022). Corporate sustainability and trade credit financing: Evidence from environmental, social, and governance ratings. Corporate Social Responsibility and Environmental Management, 29(5), 1896-1908. https://doi.org/10.1002/csr.2335

Wang, X., Cao, F., & Ye, K. (2018). Mandatory corporate social responsibility (CSR) reporting and financial reporting quality: Evidence from a quasi-natural experiment. Journal of Business Ethics, 152, 253-274. https://doi.org/10.1007/s10551-016-3296-2

Zhang, Y., Lara, J. M. G., & Tribó, J. A. (2020). Unpacking the black box of trade credit to socially responsible customers. Journal of Banking & Finance, 119, 105908. https://doi.org/10.1016/j.jbankfin.2020.105908

Downloads

Download data is not yet available.

Additional Files

Published

25-06-2024

Abstract View

301

PDF Downloaded

0

How to Cite

Nguyen Van Ha. (2024). The influence of corporate social responsibility disclosure on trade credit: A study of Vietnamese listed firms in the HOSE. VNU JOURNAL OF ECONOMICS AND BUSINESS, 4(3), 11. https://doi.org/10.57110/vnu-jeb.v4i3.338

Issue

Section

Original Article