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The Effect of Information Asymmetry on the Relationship between Trade Credit Financing and Stock Price Crash Risk

    Authors

    • Sahar Karami 1
    • Mohammed Moradi 2

    1 Department of Accounting, Faculty of Management, University of Tehran, Tehran, Iran

    2 Assistant Prof .Faculty of Management, Department of Accounting, University of Tehran, Tehran, Iran

,

Document Type : Research Paper

10.30479/jfak.2020.11923.2571
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Abstract

Purpose: The purpose of the present study is to determine the impact of the trade credit financing on the risk of stock price crash risk by emphasizing the role of information asymmetry.
Methods: In order to achieve the research objectives, 141 companies is selected from the listed companies in Tehran Stock Exchange during 2008- 2017. Multiple regression model and panel data is used to test the research hypotheses using two criteria of stock price crash risk.
Results: The results indicate that trade credit financing does not have a significant effect on the stock price crash risk. Also, information asymmetry cannot affect this relationship.
Conclusion: The results of the research suggest that suppliers can not prevent future stock price risk through regulatory and information mechanisms, in other words, suppliers can not prevent bad news from accumulating. In fact, Trade credit does not provide much of an advantage to the supplier, and the supplier cannot evaluate and monitor its customers.
Contribution: Most of the research about the stock price crash risk has focused on the uncertainty of information, corporate governance, and operating activities and has not paid much attention to the impact of financing. In this study, the relationship between financing through trade credit  and the  risk of stock price crash  is discussed, Given the issues that may affect this relationship, an analysis and consideration of one of these factors, that is, the gap between the producer and the user and is known as information asymmetry, Paid.

Keywords

  • Trade Credit Financing
  • Stock Price Crash Risk
  • Information Asymmetry
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References
References
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    • PDF Download: 1,519
Financial Accounting Knowledge
Volume 6, Issue 4 - Serial Number 23
February 2020
Pages 77-98
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How to cite
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  • Article View: 2,979
  • PDF Download: 1,519

APA

Karami, S. and Moradi, M. (2020). The Effect of Information Asymmetry on the Relationship between Trade Credit Financing and Stock Price Crash Risk. Financial Accounting Knowledge, 6(4), 77-98. doi: 10.30479/jfak.2020.11923.2571

MLA

Karami, S. , and Moradi, M. . "The Effect of Information Asymmetry on the Relationship between Trade Credit Financing and Stock Price Crash Risk", Financial Accounting Knowledge, 6, 4, 2020, 77-98. doi: 10.30479/jfak.2020.11923.2571

HARVARD

Karami, S., Moradi, M. (2020). 'The Effect of Information Asymmetry on the Relationship between Trade Credit Financing and Stock Price Crash Risk', Financial Accounting Knowledge, 6(4), pp. 77-98. doi: 10.30479/jfak.2020.11923.2571

CHICAGO

S. Karami and M. Moradi, "The Effect of Information Asymmetry on the Relationship between Trade Credit Financing and Stock Price Crash Risk," Financial Accounting Knowledge, 6 4 (2020): 77-98, doi: 10.30479/jfak.2020.11923.2571

VANCOUVER

Karami, S., Moradi, M. The Effect of Information Asymmetry on the Relationship between Trade Credit Financing and Stock Price Crash Risk. Financial Accounting Knowledge, 2020; 6(4): 77-98. doi: 10.30479/jfak.2020.11923.2571

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