Chinese culture, materialism and corporate supply of trade credit

Abstract

Purpose The purpose of this paper is to investigate how cultural value in materialism affects corporate supply of trade credits. Design/methodology/approach Using a sample of 14,710 firm-year observations of Chinese listed firms from 1998 to 2012, the authors examine the influence of regional materialism on accounts receivable. Findings The authors find that listed firms within more materialistic tend to extend less trade credit to their customers, in particular in long-term categories of trade credit. Such negative effects can be significantly mitigated by state control, suggesting the effects are more pronounced in privately controlled listed firms. The negative effects of materialism still hold after controlling for other regional factors, such as trust, GDP per capita or institutional development. Research limitations/implications The authors show materialism as a cultural construct varies across Chinese regions, and it could have important impact on corporate supply of trade credits, besides the previous found effects on consumer use of credit. Originality/value This paper expands the literature about the influence of materialism on economic decision making from the individual level to the corporate level.

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