We find that the portfolio of Korean firms with small accounts payable and large accounts receivable experiences negative excess returns when investors learn that North Korea sank a South Korean warship in May 2010. The negative effect of small accounts payable (large accounts receivable) is...

We propose the substitution hypothesis of inventory investment that predicts firms use of inventory to provide liquidity for financially constraint suppliers. Using the exhaustive data set of supplier information for Japanese listed firms, we find an increase in inventory financing when a...

We examine the heterogeneous propagation of the liquidity shortage through the supply-chain network. We find an increase of accounts receivable of a firm when its customer has strong bargaining power and financial vulnerability. Using a relation-level fixed-effects model, we find that the...