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“The Days to Pay Accounts Payable Determinants. Financing, Pricing Motives and Financial Substitution Effect. A Panel Data GMM Estimation From European Western Countries” 1
Justino Manuel de Oliveira Marquesa Associate Professor

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Contact Data:

Justino Manuel de Oliveira Marques e-mail: [e-mail] Instituto de Estudos Superiores Financeiros e Fiscais Avenida Sanatórios, Edifico Heliântia 4405-604 Vila Nova de Gaia Portugal Telefono: 00351227538800 Teelfax: 00351227624590 e-mail: [e-mail]

September 2010
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This is the 1st of 4 Essays from a Research Project called: “Essays on Corporate Finance Towards (Financial) Management Efficiency”.

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“The Days to Pay Accounts Payable Determinants. Financing, Pricing Motives and Financial Substitution Effect. A Panel Data GMM Estimation From European Western Countries”

Abstract:
This paper proposes to elect the days to pay accounts payable determinants and our findings strongly support that the accounts payable problematic is closely related to short term financial decisions with a positive and significant influence of firm’s profitability and size factors. The existence of a firm’s negative working capital is confirmed to influence strongly the reduction of the trade credit obtained from suppliers in Western Europe countries in parallel with a joint contribution of short and long term bank financing as a substitute from trade debt. Firm characteristics related to negative working capital and fixed assets level, jointly or alone, give more importance to the innovative role of short term bank financing on substituting or reducing the volume of trade credit obtained from suppliers which contradicts prior findings. Negative working capital reinforces the role of long term bank financing. It seems to induce the presence of a corporate cost reduction strategy to preserve or increment the firm’s market reputation and competition. The firm’s return on assets implies an enlargement of the days to pay