An Exploratory Study of Firms’ Bargaining Power and Cash Liquidity Performance during the Financial Crisis

This study empirically examines the impact of the bargaining mechanism of a focal firm’s power on additional costs incurred by its supply chain partners. The results show that a focal firm with greater power within an industry exerts its bargaining power over its suppliers and buyers to improve liquidity through increasing account payable days and reducing account receivable and inventory days. The upward pressure of bargaining power on a focal firm’s account payable days has become more pronounced in the presence of financial crisis. Managerial implications of the findings are discussed.