Investigating the moderating effect of agency problem on the relationship between trade credit and cost Stickiness

Subject Areas : Journal of Capital Market Analysis

akbar karimzadeh ¹ , nader rezaei ² , Zohreh Hajiha ³ , Rasoul Abdi ⁴

1 - PhD Candidate, Department of Accounting, Bonab Branch, Islamic Azad University, Bonab, Iran.
2 - Assistant Prof., Department of Accounting, Bonab Branch, Islamic Azad University, Bonab, Iran.
3 - Associate Prof., Department of Accounting, East Tehran Branch, Islamic Azad University, Tehran, Iran.
4 - Assistant Prof., Department of Accounting, Bonab Branch, Islamic Azad University, Bonab, Iran.

Received: 2022-02-01 Accepted : 2022-03-16 Published : 2022-02-20

Keywords: Agency problem, Capital expenditures, Cost stickiness, Trade credit,

Abstract :

Trade credit is an important element of short-term financing for companies. By providing trade credit, companies are putting themselves at risk because it is likely that the buyer will not use the resources properly. Also, increasing competition in domestic and global markets has required companies to better identify their cost behaviour. Therefore, in this study, the moderating effect of agency problem on the relationship between trade credit and cost stickiness on the Listed Firms in Tehran Stock Exchange has been investigated. For this purpose, the financial statements of 167 companies in the period 2010 to 2019 have been collected. This research is a quantitative research and the research method is correlational and multiple regression analysis with combined data was used to test the hypotheses. The results show that using all three criteria of trade credit, there is no significant relationship between trade credit and cost stickiness. In addition, the results show that among the indicators of agency problem, the effect of capital expenditures on the relationship between the third criterion of trade credit (ratio of accounts payable to purchases) and cost stickiness is confirmed. However, no evidence was found for the effect of acquisition ratio on the relationship between the first criterion of trade credit (ratio of accounts payable to cost of goods sold) and the second criterion of trade credit (ratio of accounts payable divided by sales) and cost stickiness.