• Gerardo Pérez-Cavazos


February 2020, Paper: "We exploit the 2017 introduction of Payment Practices Disclosure Regulation in the United Kingdom to examine the effects of mandating disclosure on customer-supplier payment practices. We find that large firms reduce their accounts payable by 12.7% while non-disclosing small and medium-sized enterprises (SMEs) reduce their accounts receivable by 11.3%. Cross-sectional tests indicate that higher expected reputational costs are an important channel driving the change in payment practices. Further, SMEs with stronger competitive positions and lower financial constraints are better able to capture the benefits. We also find evidence suggesting improved financial and competitive positions for small firms: SMEs reduce short-term debt by approximately 3.5% and are awarded an additional 4.5% in government contracts. Lastly, newly disclosed information shows that large firms accelerate payments and increase the fraction of invoices paid within agreed upon terms." 

Non-HKS Author Website - Gerardo Pérez-Cavazos