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The Impact of Integrated Market Power on Trade Credit and Cash Holding in US Retail Sector

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HCI in Business, Government and Organizations (HCII 2021)

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Abstract

This paper explores how integrated market power (Fscore) affects upstream trade credit and cash holding in the US retail sector. We investigate the above relationship via the COMPUSTAT database and focus on publicly traded firms in the US from 1984 to 2014. Applying factor analysis, we first retrieve a common factor (i.e., Fscore) in the retail sector based on three dimensions, including industry completion, finance, and operations management. Then, we run the regression analysis by ordinary least squares, Fama-Macbeth regression, and year fixed effects models. Overall, we also find that Fscore performs a negative influence on demand uncertainty and upstream trade credit. Instead, the Fscore is positively associated with the retailer’s internal cash holdings. Lastly, we reexamine the above relationships across industries within the retail sector and provide several managerial implications for this study.

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Notes

  1. 1.

    PM (i.e., Lerner Index) is used as an indicator of market power (Lerner, 1934).

  2. 2.

    The VIF values do not exceed this threshold at the following tables. Therefore, we will not further present the VIF values.

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Authors and Affiliations

  1. Department of Finance, College of Management, National Sun Yat-sen University, NO. 70, Lian Hai Rd., Gushan Dist., Kaohsiung City, 80424, Taiwan

    Shih-Sian Jhang & Chih-Yang Cheng

  2. Department of Operations Management and Strategy, School of Management, University at Buffalo-SUNY, 325A Jacobs Hall, Buffalo, NY, 14260-4000, USA

    Winston T. Lin

Authors
  1. Shih-Sian Jhang
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  2. Chih-Yang Cheng
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  3. Winston T. Lin
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Correspondence to Chih-Yang Cheng .

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Editors and Affiliations

  1. Missouri University of Science and Technology, Rolla, MO, USA

    Fiona Fui-Hoon Nah

  2. Missouri University of Science and Technology, Rolla, MO, USA

    Keng Siau

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Jhang, SS., Cheng, CY., Lin, W.T. (2021). The Impact of Integrated Market Power on Trade Credit and Cash Holding in US Retail Sector. In: Nah, F.FH., Siau, K. (eds) HCI in Business, Government and Organizations. HCII 2021. Lecture Notes in Computer Science(), vol 12783. Springer, Cham. https://doi.org/10.1007/978-3-030-77750-0_13

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  • DOI: https://doi.org/10.1007/978-3-030-77750-0_13

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