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http://dx.doi.org/10.5762/KAIS.2021.22.6.283

Trade Payable and Corporate Failure: Analysis of Trade Payable Impact according to Company Size through Survival Analysis  

Kim, Bong-Min (Department of Business Administration, Changwon National University)
Kim, So Ra (Department of Business Administration, Changwon National University)
Publication Information
Journal of the Korea Academia-Industrial cooperation Society / v.22, no.6, 2021 , pp. 283-290 More about this Journal
Abstract
Survival analysis was used to determine whether there are differences in the impact of trade payables on business failure according to the size of the company. A total of 41,781 firms from 1999 to 2019 were analyzed. The analysis period was divided into the entire period and before and after the financial crisis. The trade payable ratio is a proxy variable. The increase in trade payables over the entire period increases the possibility of business failure of Small and Medium Enterprises (SMEs). However, in large firms, a significant relationship between the increase in the trade payable ratio and the possibility of corporate failure could not be confirmed. Second, in SMEs during the sub-periods of 1999-2007 and 2009-2019, it was found that an increase in trade payables acts as a factor that increases the possibility of corporate failure. However, in large corporations, the increase in trade payables in the period from 2009 to 2019 has been shown to reduce the rate of failure. An increase in trade payables is recognized as the active development of business activities or the active use of interest-free debt. Therefore, it was confirmed that the impact of trade payables on corporate failure differs depending on the size of the company.
Keywords
Trade Payable; Corporate Failure; Survival Analysis; Cox Proportional Hazard Model; Firm Size;
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