Faculty Scholarly Dissemination Grants

Title

Accounts Receivable, Accounts Payable And Supply Chain Bullies: A Markov Chain Liquidity Model

Department

Finance Department

College

Seidman College of Business

Disciplines

Business

Abstract

Literature has recently emphasized the effects of up-stream and/or down-stream firms with economic power over a firm. These papers provide anecdotal evidence of deleterious effects of these firms who choose to exercise these powers: bullies. We: develop measures for up- and down-stream bullies; expand on previous models of accounts receivable behavior using Markov chains to generate analytical results regarding the effects of bullying such as exacerbated cash flow asynchronies and diminished firm liquidity. We further conclude that firms should include strategies for dealing with up- or down-stream bullies in their liquidity strategies.

Conference Name

Midwest Finance Association

Conference Location

Chicago

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