The relationship between commercial credit and operatingperformanceof listed companies on The Ho Chi Minh stock exchange (Hose)

Abstract

The purpose of this study is to investigate the association between operating performance and trade credit of companies listed on the Ho Chi Minh Stock Exchange between 2017 and 2022 . With a sample of 1 72 companies listed on the Ho Chi Minh Stock Exchange (HOSE) with 1, 032 firm year observations. The thesis uses ordinary least squares regression (OLS), fixed effects model (FEM), random effects model (REM), feasible generalized least squares (FGLS), and generalized method of moments (GMM) regression to obtain estimated results. The results show that investing in trade credit will significantly increase operating efficiency. In addition, the results also show an inverted U shaped relationship between trade credit and corporate operating performance , including accounts receivable and accounts payable, and the profitability of enterprises. Consequently, it deduces the optimal level of commercial credit where businesses can balance between benefits and costs, yielding the highest potential profit for the enterprise. Based on the experimental results, this study suggests that enterprises should manage their commercial credit policies well, especially sales credit and capital occupancy policies. Therefore, managers should strive to maintain commercial credit levels close to the optimal level to increase the profitability of the enterprise.