Journal of Intelligent Financial Management

Journal of Intelligent Financial Management

Explaining the Effect of Trade Credit Financing on Corporate Environmental Performance: A Focus on Financing and Signaling Mechanisms

Document Type : Original Article

Authors
Ehsan Saadati 1
Elmira Mohammadkhanloo 2
Ebrahim Enayatpour Shiyadeh 3
Ali Madresedost 4
Alireza Farahmandnia 5
1 Department of Accounting, Dam.C., Islamic Azad University, Damavand, Iran
2 Department of Accounting, Qa.C., Islamic Azad University, Qazvin, Iran
3 Department of Accounting, QaS.C., Islamic Azad University, Qaemshahr, Iran
4 Department of Accounting, ST.C., Islamic Azad University, Tehran, Iran
5 Department of Financial Management, Esf.C., Islamic Azad University, Esfarayen, Iran
10.25843/JIFM.2025.8563.236301
Abstract
This study aims to investigate the effect of trade credit financing on the environmental performance of business entities and to simultaneously examine its role through the financing function and signaling mechanism. Accordingly, beyond serving a financing function, trade credit financing can contribute to improving the environmental performance of business entities through mechanisms related to financial resources, investment, and ownership structure. Furthermore, the strengthening of environmental regulations and improvements in the environmental performance of business entities may enhance their access to trade credit financing by strengthening their trustworthiness and creditworthiness within the supply chain. The novelty of this study lies in its simultaneous examination of the effect of trade credit financing on the environmental performance of business entities, with particular emphasis on two dimensions: the financing function and the signaling mechanism of trade credit. In terms of research design, this study employs a quantitative, empirical (positive) approach and adopts a deductive methodology based on actual and observable data. The statistical population consists of companies listed on the Tehran Stock Exchange during the period from 2017 to 2026. Following the application of the sample selection criteria, 168 manufacturing companies were selected as the research sample. The required data were collected from the audited financial statements and financial reports of the selected companies through the Codal system and the Rahavard Novin database and were analyzed using EViews software. The results indicate that trade credit financing has a positive and significant effect on the environmental performance of business entities. Furthermore, this positive effect is supported by increases in the cash holding ratio, environmental investment, institutional investor ownership, and the attraction of green investors.
Keywords
Trade Credit
Environmental Performance
Financing
Environmental Investment
Subjects
ایزدپور، م.، محمدی مقدم، م.، و حیدری سورشجان، ز. (۱۴۰۴). تأثیر افشای عملکرد زیست‌محیطی، اجتماعی و حاکمیتی بر عرضه و تقاضای اعتبار تجاری. فصلنامه اقتصاد مالی، ۱۹(۳)، ۱۱۷–۱۴۲.
فرح‌آبادی، م.، و حیدرپور، ف. (۱۴۰۱). تأثیر جهت‌گیری محیط‌زیست بر عملکرد مالی با تأکید بر اثرات مدیریت سبز تأمین‌کننده و سرمایه ارتباطی. قضاوت و تصمیم‌گیری در حسابداری، ۱(۱)، ۶۷–۹۰.
محمودی, مقداد . (1404). تحلیل تأثیر تأمین مالی سبز بر سودآوری شرکت‌ها با تأکید بر اهداف توسعه پایدار و عملکرد زیست‌محیطی: مطالعه موردی شرکت توسعه نیشکر و صنایع جانبی. مطالعات توسعه اجتماعی -اقتصادی, 3(2), 281-306.
پرندین,کاوه , شیرزادی,یاسر , قربانی,حسن و مطیع,پروانه . (1405). تأثیر تأمین مالی سبز بر پایداری شرکت ها: نقش تعدیل کننده تعهد مدیریت. مطالعات مدیریت توسعه سبز, 5(1), 43-62.
گرجی, محمدرضا, قدرتی, حسن, عرب زاده, میثم, و پناهیان, حسین. (1402). تاثیر کیفیت سود بر اعتبار تجاری شرکت با تاکید بر نقش تعدیل کنندگی ثبات رویه اطلاعات حسابداری: رویکرد متن کاوی. دانش حسابداری و حسابرسی مدیریت, 12(45), 391-406.
یزدی کاه کشی, فرزاد, امامی کورنده, محمد, و مقدس, امیرحسین. (1401). الگویابی معادلات ساختاری نقش میانجی مدیریت منابع انسانی سبز در رابطه بین تعهد سبز مدیریت ارشد و عملکرد زیست محیطی. فصلنامه ارزش آفرینی در مدیریت کسب و کار, 2(1), 114-136.
اخگر, محمد امید , امینی, پیمان و مرادی, آزاده . (1402). بررسی تاثیر عملکرد زیست محیطی بر ریسک سقوط قیمت سهام با تاکید بر محافظه کاری حسابداری در بورس اوراق بهادار تهران. پژوهش های تجربی حسابداری, 13(1), 121-140
سجادی, سید حسین , رشیدی باغی, محسن , ابوبکری, عبدالرحمن و شیرعلی زاده, محسن . (1394). رابطه‌ ی بین حق‌ الزحمه ‌ی حسابرسی و پاداش هیئت مدیره. پژوهش های تجربی حسابداری, 5(3), 39-58.
Ai, C., & Norton, E. C. (2003). Interaction terms in logit and probit models. Economics letters, 80(1), 123-129.
Almaghrabi, K. S., & Atawnah, N. (2026). Does corporate waste management facilitate access to trade credit? International evidence. International Review of Economics & Finance, 104960.
Bai, M., Cai, J., & Qin, Y. (2021). Ownership discrimination and private firms financing in China. Research in International Business and Finance, 57, 101406.
Bouchmel, I., Ftiti, Z., Louhich, W., & Omri, A. (2024). Financing sources, green investment, and environmental performance: Cross-country evidence. Journal of Environmental Management, 353, 120230.
Bruno, C. C., & Henisz, W. J. (2024). Environmental, social, and governance (ESG) outcomes and municipal credit risk. Business & Society, 63(8), 1709-1756.
Cai, L., & He, C. (2022). Corporate environmental responsibility and bank loans. Business Ethics, the Environment & Responsibility, 31(3), 741-761.
Chen, Q., Li, Y., Zhao, Q., & Liu, F. (2024). Information quality and cost of credit bond financing. Finance Research Letters, 59, 104708.
Chen, R., Wu, Y., Wu, X., & Tian, X. (2026). FinTech and trade credit financing: evidence from Chinese listed firms. Pacific-Basin Finance Journal, 103069.
Chen, Y., Xu, Z., Wang, X., & Yang, Y. (2023). How does green credit policy improve corporate social responsibility in China? An analysis based on carbon‐intensive listed firms. Corporate Social Responsibility and Environmental Management, 30(2), 889-904.
Cui, H., Wang, Y., & Wang, B. (2026). Does artificial intelligence contribute to soliciting trade credit?. International Review of Economics & Finance, 105097.
Dechezleprêtre, A., Muckley, C. B., & Neelakantan, P. (2021). Is firm-level clean or dirty innovation valued more?. The European Journal of Finance, 27(1-2), 31-61.
Deng, Y., Zhang, L., Zhang, J., & Farooq, U. (2023). Does green innovation promote trade credit activities? New empirical evidence from BRICS. Borsa Istanbul Review, 23(6), 1322-1332.
Du, Q. A., Li, H., Fu, Y., Fu, X., Wang, R., & Jia, T. (2023). More Green, Better Funding? Exploring the Dynamics between Corporate Bank Loans and Trade Credit. Sustainability, 15(13), 10050.
Duan, Y., Hofer, C., & Aloysius, J. A. (2021). Consumers care and firms should too: On the benefits of disclosing supplier monitoring activities. Journal of Operations Management, 67(3), 360-381.
EFENDI, Y. A. I., HASANIYAH, A., BUSTARAM, I., & KUSUMA, A. (2026). Cash Holding and Leverage as Determinants of Financial Performance: Evidence from Food and Beverage Companies Listed on the Indonesia Stock Exchange, 2022-2024. International Journal of Economics and Business Management Research, 2(3), 125-131.
Gan, X. D., Zheng, X. Y., Li, C. C., & Zhu, G. Q. (2024). Green bond issuance and trade credit access: Evidence from Chinese bond market. Finance Research Letters, 60, 104842.
Gangi, F., Daniele, L. M., & Varrone, N. (2020). How do corporate environmental policy and corporate reputation affect risk‐adjusted financial performance?. Business Strategy and the Environment, 29(5), 1975-1991.
Ge, Y., Zhu, H., & Zhang, R. (2026). The effect of green investors on firms' trade credit. Emerging Markets Review, 101492.
Gong, G., & Yang, N. (2025). Do corporate environmental violations affect trade credit? Evidence from China. Emerging Markets Review, 64, 101236.
Guifeng, S. (2022). Does industry-specific information disclosure improve trade credit financing? China Journal of Accounting Studies, 10(2), 203–227.
Gull, A. A., Atif, M., Ahsan, T., & Derouiche, I. (2022). Does waste management affect firm performance? International evidence. Economic Modelling, 114, 105932.
Guo, F., Li, B., Shi, C., Cao, R., & Gong, X. (2026). When life gives you lemons: green credit policy and corporate environmental responsibility of heavily polluting firms. Sustainability Accounting, Management and Policy Journal, 1-30.
Guo, Y., & Yao, R. (2024). Supply chain interconnection and SME financing: From the perspective of supply chain finance and trade credit. China Economic Quarterly International, 4(4), 249-265.
Hardy, B., & Sever, C. (2021). Financial crises and innovation. European Economic Review, 138, 103856.
Heo, Y. J. (2026). ESG performance and trade credit: evidence from OECD countries. Applied Economics Letters, 33(7), 935-938.
Hu, X., Song, X., & Su, W. (2023). Ill‐intentioned or well‐intentioned: earnings management and trade credit. Asian‐Pacific Economic Literature, 37(1), 88-120.
Huang, Y. C., & Huang, C. H. (2024). Exploring institutional pressure, the top management team's response, green innovation adoption, and firm performance: evidence from Taiwan's electrical and electronics industry. European Journal of Innovation Management, 27(3), 800-824.
Imai, K., Keele, L., & Tingley, D. (2010). A general approach to causal mediation analysis. Psychological methods, 15(4), 309.
Khalid, F., Naveed, K., Voinea, C. L., L. Curseu, P., & Xinhui, S. (2024). Organizational stakeholders and environmental sustainability investment: does China’s regional heterogeneity matter?. Society and Business Review, 19(3), 381-402.
Khalid, F., Toumi, F., & Srivastava, M. (2026). Attracting green capital: climate targets disclosure, green female directors, and policy uncertainty. Business Strategy and the Environment, 35(2), 2755-2776.
Landu, M., Mota, J. H., Bandeira, A. M., & Moreira, A. C. (2026). Quality of financial information and trade credit: an analysis of medium-sized retail companies in Portugal. Cogent Business & Management, 13(1), 2628917.
Li, C. (2025). How does supplier concentration affect firm trade credit. Finance Research Letters, 108364.
Li, Q., Chen, Y., & Wan, M. (2023). The impact of central environmental inspection on institutional ownership: Evidence from Chinese listed firms. Pacific-Basin Finance Journal, 77, 101934.
Li, W., Hua, X., Boateng, A., Wang, Y., & Du, M. (2025). The value of being greener: Untangling the relationship between environmental investment and firms’ access to trade credit. British Journal of Management, 36(3), 1023-1038.
Li, Y., Zhao, X., & Yang, X. (2025). ESG performance and corporate environmental investment: Incentive or inhibition?. Finance Research Letters, 75, 106814.
Lin, B., & Dong, X. (2024). Empirical study on the impact of digital finance on commercial credit allocation in SMEs. Finance Research Letters, 61, 105011.
Ling, X., Yan, L., & Dai, D. (2022). Green credit policy and investment decisions: Evidence from China. Sustainability, 14(12), 7088.
Luo, C., Wei, D., & He, F. (2023). Corporate ESG performance and trade credit financing–Evidence from China. International Review of Economics & Finance, 85, 337-351.
Miah, M. S., Shams, A., & Ferdous, C. S. (2025). Trade Credit, Business Group Affiliation, and Cash Holdings: Evidence from Bangladesh. Journal of Financial Markets and Governance, 4(1), 15-36.
Michel, A., Oded, J., & Shaked, I. (2020). Institutional investors and firm performance: Evidence from IPOs. The North American Journal of Economics and Finance, 51, 101099.
Pimonenko, T., Chygryn, O., & Lyulyov, O. (2019). Green branding as a driver to boost the development of green investment market. Bulletin of the Cherkasy Bohdan Khmelnytsky National University. Economic Sciences, (1).
Qian, X., Qiu, S., Zhang, X., & Zhao, Y. (2026). Environmental Regulation and Corporate Trade Credit Financing: Evidence From the Cleaner Production Standards in China. International Review of Finance, 26(1), e70059.
Ramalingegowda, S., Utke, S., & Yu, Y. (2021). Common institutional ownership and earnings management. Contemporary Accounting Research, 38(1), 208-241.
sánchez, M. J., canto-cuevas, c. F., & Pietro, F. D. (2022). examining the effects of the quality of financial reports on sMe trade credit: an innovative approach. International Review of Finance, 22(4), 662–668.
Shen, Y., Su, Z. W., Huang, G., Khalid, F., Farooq, M. B., & Akram, R. (2020). Firm market value relevance of carbon reduction targets, external carbon assurance and carbon communication. Carbon Management, 11(6), 549-563.
Song, S., Lian, J., Skowronski, K., & Yan, T. (2024). Customer base environmental disclosure and supplier greenhouse gas emissions: a signaling theory perspective. Journal of Operations Management, 70(3), 355-380.
Sun, D., Zhang, Y., & Meng, X. (2023). Green side of informal institutions: Social trust and environmental sustainability. Business Ethics, the Environment & Responsibility, 32(4), 1352-1372.
Sun, Z., Sun, X., Wang, W., & Wang, W. (2025). Digital transformation and greenwashing in environmental, social, and governance disclosure: does investor attention matter?. Business Ethics, the Environment & Responsibility, 34(1), 81-102.
Tian, H., & Tian, G. (2022). Corporate sustainability and trade credit financing: Evidence from environmental, social, and governance ratings. Corporate Social Responsibility and Environmental Management, 29(5), 1896-1908.
Tolliver, C., Fujii, H., Keeley, A. R., & Managi, S. (2021). Green innovation and finance in Asia. Asian Economic Policy Review, 16(1), 67-87.
Wang, J., Liu, T., Aziz, N., & Sui, H. (2024). Exploring the role of trade credit in facilitating low-carbon development: Insights from Chinese enterprises. International Review of Financial Analysis, 96, 103760.
Wang, S. (2023). Corporate sustainability and trade credit: Evidence from ESG. In SHS Web of Conferences (Vol. 163, p. 01012). EDP Sciences.
Wang, Y., Guo, R., & Wan, Q. (2026). Cross-border climate policy and corporate environmental investment: Evidence from the EU CBAM and Chinese firms. Finance Research Letters, 110179.
Wen, F., Zou, Q., & Wang, X. (2021). The contrarian strategy of institutional investors in Chinese stock market. Finance Research Letters, 41, 101845.
World Health Organization. (2024). Climate change. https://www.who.int/news-room/fact-sheets/detail/climate-change-and-health
Xing, C., Zhang, Y., & Tripe, D. (2021). Green credit policy and corporate access to bank loans in China: The role of environmental disclosure and green innovation. International Review of Financial Analysis, 77, 101838.
Zaman, R., Atawnah, N., Banigidadmath, D., Nadeem, M., & Liu, J. (2025). Do companies’ green credentials enhance trade credit provisions? Global evidence. Journal of International Financial Markets, Institutions and Money, 103, 102204.
Zhou, M., Jiang, K., & Zhang, J. (2023). Environmental benefits of enterprise digitalization in China. Resources, Conservation and Recycling, 197, 107082.
Zhu, B., Xu, C., Wang, P., & Zhang, L. (2022). How does internal carbon pricing affect corporate environmental performance?. Journal of Business Research, 145, 65-77.