This pre-registered study aims to explore the interaction between internal board structure arrangements and external stakeholder reactions. Specifically, we focus on how customers and suppliers respond to board ownership representativeness, which measures the alignment of interests between the board and the shareholders. We investigate the following questions in this study: (1) Does board ownership representativeness impact corporate trade credit? (2) If so, what is the mechanism underlying this effect? (3) What impact does the legal environment and information asymmetry have on this relationship? (4) How does board ownership representativeness interact with the role of independent directors? (5) How does the change in trade credit driven by board ownership representativeness ultimately influence a firm's performance? This study expands the research on the economic consequences of board structure from the perspective of board ownership representativeness and provides a new lens for enhancing firms' access to trade credit.
This pre-registered study implements the empirical design approved in the associated pre-registered report (Jiang and Ma, 2025) to analyze the impact of board ownership representativeness on corporate trade credit. The key findings are as follows: 1) board ownership representativeness significantly increases a firm's trade credit. 2) the increase in trade credit is primarily driven by the enhanced monitoring role of directors, which alleviates agency problems and reduces concerns among both customers and suppliers. 3) the positive relationship between board ownership representativeness and trade credit is more pronounced in firms operating in weaker legal environments and facing higher levels of information asymmetry. 4) independent directors do not significantly impact the positive effect of board ownership representativeness. 5) the positive influence of board ownership representativeness on trade credit contributes to improved firm performance. 6) board ownership representativeness emerges as the more salient governance mechanism compared to board independence in enhancing trade credit. This study expands the investigation into the economic implications of board structure by focusing on board ownership representativeness and offers a new perspective on enhancing firms' access to trade credit.