Acta Univ. Agric. Silvic. Mendelianae Brun. 2020, 68(4), 775-796 | DOI: 10.11118/actaun202068040775

The Impact of Trade Credit Investment on Manufacturing Firms' Profitability: Evidence from Vietnam

Duong Phuong Thao Pham, Thi Cam Ha Huynh
School of Finance, University of Economics Ho Chi Minh City, 59C Nguyen Dinh Chieu, Ward 6, District 3, Ho Chi Minh City, Vietnam

The aim of this study is to examine the effect that trade credit investment has on firms' profitability. The characteristics of this relationship have not been dealt with in depth for manufacturing firms. We use panel data for a total of 227 Vietnamese publicly listed manufacturing firms for the period 2005-2017. Different econometric estimation techniques such as the feasible generalized least squares, fixed effects and random effects and different calculation of firm performance such as non market-based measure (return on assets) and market-based measure (Tobin's q) are employed to validate the consistent results. The robust results confirm a statistically significant inverted U-shaped relationship between trade credit investment and profitability.

Keywords: trade credit investment, profitability, manufacturing firms
Grants and funding:

This research is funded by University of Economics Ho Chi Minh City, Vietnam. We are grateful to the two anonymous peer reviewers for their constructive comments.

Received: March 18, 2020; Accepted: August 6, 2020; Published: August 30, 2020  Show citation

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Pham, D.P.T., & Huynh, T.C.H. (2020). The Impact of Trade Credit Investment on Manufacturing Firms' Profitability: Evidence from Vietnam. Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, 68(4), 775-796. doi: 10.11118/actaun202068040775
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