Corporate social responsibility and provision of trade credit

Adrian (Waikong) Cheung, Wee Ching Pok

Research output: Contribution to journalArticlepeer-review

18 Citations (Scopus)


In this article, we identify and examine three different views of corporate social responsibility (CSR) and the relationship between CSR and firms’ provision of trade credit. The trust view of CSR argues that CSR and trade credit provision are related positively, because CSR, as a trust-enhancing device, complements the incomplete contract nature of trade credit. The CSR literature shows that CSR firms tend to have higher cash holdings. With this in mind, the precautionary motive view of CSR suggests that cash holdings serve as a hedge against trade credit risk, while, on the other hand, the substitution view of CSR predicts that cash hoarding discourages the provision of trade credit. Using a dataset of 20,591 firm-year observations from 1991 to 2015, we find strong evidence that supports both the trust and substitution views of CSR but not the precautionary view of CSR.

Original languageEnglish
Article number100159
Number of pages17
JournalJournal of Contemporary Accounting and Economics
Issue number3
Early online date15 Jun 2019
Publication statusPublished - Dec 2019


  • Accounts receivable
  • Corporate social responsibility
  • Incomplete contract
  • Precautionary motive view
  • Substitution view
  • Trade credit
  • Trust


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