Page 22 - Special Topic Session (STS) - Volume 4

STS556 Nitin Kumar et al.

Table 1: Accounts payables

Chemical
Variables All Manufacturing Services Product Textiles Small Large
(1) (2) (3) (4) (5) (6) (7)

Intercept 0.025* 0.015 0.048 -0.014 0.072** -0.014 0.057

(0.014) (0.016) (0.034) (0.037) (0.032) (0.028) (0.036)
L1.Dep 0.564*** 0.602*** 0.514*** 0.437*** 0.414*** 0.479*** 0.467***
(0.017) (0.019) (0.044) (0.042) (0.038) (0.041) (0.034)
INV 0.003** 0.004* 0.002 6.8E-04 0.012*** 6.8E-04 0.004
(0.002) (0.002) (0.003) (0.004) (0.004) (0.002) (0.003)
SIZE
-0.002 -0.001 -0.005 0.013* -0.022*** 0.004 -0.002
(0.002) (0.003) (0.005) (0.007) (0.006) (0.003) (0.005)
ROA -0.034*** -0.023** -0.081*** -0.059** -0.038* -0.041*** -8.3E-04
(0.01) (0.011) (0.022) (0.026) (0.021) (0.015) (0.019)
DEBT -0.025*** -0.031*** 0.014 -0.055** -0.004 -0.012 -0.082***

(0.007) (0.008) (0.019) (0.023) (0.014) (0.012) (0.014)
BORR 0.002 0.003 2.6E-04 0.007 -0.003 0.01** -0.003
(0.003) (0.003) (0.006) (0.007) (0.007) (0.005) (0.005)
CATA 0.111*** 0.117*** 0.046*** 0.106*** 0.075*** 0.119*** 0.06***
(0.009) (0.01) (0.016) (0.02) (0.02) (0.017) (0.013)
L1.INF
-0.008*** -0.007** -0.011 -0.002 0.014** 0.006 -0.008
(0.003) (0.003) (0.008) (0.008) (0.007) (0.01) (0.005)
L1.INT_RATE 8.2E-04* 4.9E-04 0.001 -6.9E-06 -7.2E-04 -2.9E-04 7.6E-04
(4.3E-04) (4.9E-04) (0.001) (0.001) (0.001) (0.001) (6.7E-04)
L1.GR_RATE -0.001*** -0.002*** 0.002 -0.002* 3.3E-04 -8.7E-04 -5.2E-04

(4.8E-04) (5.4E-04) (0.001) (0.001) (0.001) (0.001) (7.3E-04)
Wald Statistics 1480*** 1333*** 206*** 201*** 192*** 213*** 263***

All specifications are estimated using GMM first-difference specification. *, **, *** indicate
significance at 10%, 5%, and 1% level, respectively.

Initiating with column (1), estimation results for entire sample shows
positive and significant lag coefficient reflecting strong persistence. The
significant and positive effect of inventories on accounts payables indicates
higher usage of trade credit towards accumulating inventories validating
Vaidya (2011). The finding is in consonance with ROA is having strong inverse
impact on accounts payables implying profitable firms immediately repaying
trade credit to rid from this expensive form of credit. The coefficient of debt
to asset ratio is negative and significant. A higher debt financing is leading to
reduced trade credit borrowing indicating debt financing used as substitute
vis-a-vis trade credit. Both ROA and DEBT are in harmony with pecking order
theory that postulates internally generated funds to be higher in order

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