Institutional investor network and trade credit: Based on financing and supply perspective

CHEN Ziang, ZHANG Junrui

Systems Engineering - Theory & Practice ›› 2023, Vol. 43 ›› Issue (7) : 2034-2054.

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Systems Engineering - Theory & Practice ›› 2023, Vol. 43 ›› Issue (7) : 2034-2054. DOI: 10.12011/SETP2022-1618

Institutional investor network and trade credit: Based on financing and supply perspective

  • CHEN Ziang, ZHANG Junrui
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Abstract

Trade credit is an important issue in economic, management and accounting research. In this paper, we construct an institutional investor network based on the institutional investor's heavy holding data of A-share listed companies from 2004 to 2020, and study its effect on trade credit financing and supply. We find that: 1) The centrality of the institutional investor network has an "open source and save expense" effect on trade credit, increasing trade credit financing while reducing trade credit supply; 2) The effect of the institutional investor network still exists after considering the influence of chain director, and it is robust after replacing the centrality measurement and limiting the sample in the manufacturing industry; 3) The impact of institutional investor network on trade credit is moderated by the nature of enterprise and the level of financing constraint, and the location of institution represented by different centrality indicators has different impacts on trade credit; 4) Institutional investor network affects trade credit by enhancing the value of companies and increasing analysts' attention, which verifies the governance and signaling effects, and the impact of institutional network on trade credit is influenced by the concentration of suppliers and customers, and the above effects are stronger when suppliers and customers are more dispersed overall; 5) Institutional investor network promotes cite visit behavior and thus enhance trade credit financing, while the entry of "RongZiRongQuan" catalog also promotes companies to obtain more trade credit financing. The above findings provide empirical evidence on how institutional investor network affects firms' trade credit financing and supply, and help firms and regulators recognize the role of institutional investor in guiding the flow of trade credit capital.

Key words

institutional investor / social network / centrality / trade credit financing / trade credit supply

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CHEN Ziang , ZHANG Junrui. Institutional investor network and trade credit: Based on financing and supply perspective. Systems Engineering - Theory & Practice, 2023, 43(7): 2034-2054 https://doi.org/10.12011/SETP2022-1618

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Funding

National Natural Science Foundation of China (72072143); National Social Science Foundation of China (20ZDA051, 20FGLA005)
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