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Title: Corporate governance and credit financing in a developing economy
Authors: Mugova, Shame 
Sachs, Paul R. 
Keywords: Corporate Governance;Trade Credit;Financial Sector Development;Implicit Cost
Issue Date: 2017
Publisher: Virtus Interpress
Source: Mugova, S. and Sachs, P. R. 2017. Corporate governance and credit financing in a developing economy. Corporate Ownership & Control, 14(4-2): 341-349.
Journal: Corporate ownership & control (Online) 
Emerging markets have common weaknesses in their financial market development. Financial development is one institutional force that shapes financing and governance of firms in emerging markets. Debt and equity are alternative governance instruments. Trade credit is part of debt and therefore should be treated as such in corporate governance. We used a fixed effect regression of financial sector development and trade credit of firms listed on the Johannesburg Stock Exchange to ascertain the relationship of financial sector development and trade credit. We also analyzed the Socially Responsible Index (SRI) which measures corporate governance. We find that good corporate governance practices do not result in substituting of trade credit, despite its high implicit costs, with bank loans for working capital financing.
ISSN: 1727-9232 (print)
1810-3057 (online)
Appears in Collections:Research Publications (Management Sciences)

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