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The association of a firm’s media reputation and trade credit supply Machteld Van

By Den Bogaerd and Walter Aerts


A positive corporate reputation is generally taken to be a valuable resource leading to competitive advantage. In this paper we examine the association between a firm's media reputation and the amount of trade credit given in a sample of listed UK firms. Consistent with expectations, our results show that a firm's willingness to extend trade credit to its customers is inversely related to its media reputation. The better its reputation, the less trade credit it allows. Moreover, the effect of media reputation on trade credit supply is stronger for younger firms and smaller firms, suggesting that media reputation is more effective in reducing trade credit given for firms lacking a well-established product performance reputation. These results document one of the ways in which corporate reputation, as an intangible resource, creates value for a firm. I

Year: 2011
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