Trade credit and family control

Abstract

This paper analyses whether trade credit strategies depend on the family identity of the controlling shareholder. We use a sample of 4,022 private Spanish firms for the years 2004 and 2013 and examine family firm heterogeneity by analysing different thresholds of control, involvement in management and firm identification with the family name. The results reveal that family firms have more restrictive trade credit strategies than non-family firms. Moreover, among family-controlled firms, those with the strongest identification between the family shareholders and their firms are the most restrictive. However, family-controlled firms reduced trade credit less after the financial crisis of 2008. These firms supported their customers by limiting the impact of liquidity shocks during the crisis.