Can Board Connections Help Companies Get More Trade Credit?

Summary

This study examines whether firms with more board connections—directors who serve on multiple corporate boards—have better access to trade credit from suppliers. Trade credit is a critical and widely used source of short-term financing in the U.S., allowing firms to purchase goods and delay payment to manage cash flow. Using a large sample of 27,377 U.S. firm-year observations from 2000–2017, the study tests whether board networks improve firms’ perceived creditworthiness by facilitating the flow of private information about reputation, liquidity, and reliability.