Despite the obvious problems associated with collections, firms routinely sell on credit. Conventional wisdom suggests offering credit is a necessary evil when dealing with insistent cash-constrained customers. This paper provides a more positive view of trade credit. We find that offering...

We examine the interaction between discretionary and non-discretionary accruals in a stewardship setting. Contracting includes multiple rounds of renegotiation based on contractible accounting information and non-contractible but more timely non-accounting information. We show that accounting...

We analyse the auditing procurement process when the client is initially uncertain about her/her auditing needs and when she/he cannot discern the level of assurance provided by the auditor. The client's limited information can lead to under-auditing and substantial rent for auditors, despite...