The Influence of Accounting Information Quality on Trade Credit with Inventory Liquidation Cost as Moderating Variable

Abstract

This research is aimed to examine (1) effect of accounting information quality on trade credit, (2) moderating role of inventory liquidation cost on the effect of accounting information quality on trade credit. Research sample are 122 manufacture companies listed in Indonesian Stock Exchange 2013-2016. Data analysis uses multiple regression test. Results show that accounting information quality has effect on trade credit usage. It indicates that suppliers advantages of free of information asymmetric, direct involvement to company’s business activities, and higher recovery rate of payment failure makes suppliers are less likely to use accounting information to evaluate company’s credit worthiness; further, it leads to high trade credit fund resource used by company with low accounting information quality. Inventory liquidation cost moderates the effect of accounting information quality on trade credit usage. It indicates that suppliers will give trade credit for company with low accounting information quality if inventory liquidation cost is low.

Keywords: Accounting Information Quality, Trade Credit, Inventory Liquidation Cost

DOI: 10.7176/RJFA/10-12-14

Publication date:June 30^th 2019