The Impact of the COVID-19 Crisis on the Speed of Adjusting the Commercial Credit of Companies, Considering the Ability of Managers

Objectives: This study aims to investigate the impact of the COVID-19 crisis on the speed of adjustment of trade credit among companies listed on the Tehran Stock Exchange (TSE), with particular attention to the moderating role of managerial ability. Methodology/Design/Approach: The research sample includes 131 listed firms observed over a ten-year period (2013–2022), selected using the systematic exclusion method. A multivariable linear regression model was employed to test the research hypotheses. The model developed by Luo (2022) was used to measure the speed of adjustment of trade credit before and after the COVID-19 outbreak, while the model of Demerjian et al. (2012) was applied to evaluate managerial ability. Findings: The results indicate that, on the demand side of trade credit, the speed of adjustment of accounts payable increased by approximately 17% after the COVID-19 outbreak, with capable managers further accelerating this trend. Conversely, on the supply side, the speed of adjustment of accounts receivable declined by nearly 50%. This decline is attributed to rising inflation and economic instability during the post-crisis period, which led managers— including highly capable ones—to deliberately slow the adjustment of credit sales in order to benefit from inventory retention and mitigate risks in inflationary conditions. Innovation: This study extends the literature by demonstrating how crises such as COVID-19 reshape trade credit dynamics in emerging markets. It highlights the asymmetric effects on the supply and demand sides of trade credit and underscores the role of managerial ability in adapting financial policies under conditions of uncertainty and economic instability.