Settling debts in the supply chain: do prompt payment codes make a difference? A UK study

Christopher Cowton, Leire San-Jose

Research output: Contribution to journalArticlepeer-review

Abstract

Trade credit has only recently been taken seriously by business ethicists, despite the common practice of slow payment of suppliers. In response, the UK has introduced a series of voluntary 'payment codes'. However, at the time to which our data relate, relatively few FTSE 100 companies had signed up. Furthermore, although signatories paid more quickly, the difference was not statistically significant. These two findings might appear to suggest that payment codes are ineffective. However, some companies claimed to be following a code which was defunct. Their payment speed was indistinguishable from non-signatories, but those that had signed the extant code paid significantly more quickly. Our findings not only suggest that a payment code might be effective but also show a result relevant to codes of ethics more generally - that there might be signs that a company is not taking a code seriously, which we identify with the notion of hypocrisy.
Original languageEnglish
Pages (from-to)153-168
Number of pages16
JournalInternational Journal of Business Governance and Ethics
Volume15
Issue number2
Early online date15 Jan 2021
DOIs
Publication statusPublished - 1 Apr 2021

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