This study examines how rhetorical tone management in buyers’ annual reports contributes to trade credit misallocation in supply chains. While suppliers rely on buyer disclosures for credit decisions, the uncertainty in qualitative reporting creates operational risks. Building on the signaling theory, we argue that buyers’ strategically optimistic tones in annual reports function as distorted signals that exploit suppliers’ limited access to private information, leading to inefficient trade credit decisions reflected in excessive days payable outstanding (DPO). Applying textual analysis methods to 776 firm-year observations (2007–2022), we measure tone management and test our hypotheses using two-way fixed effects panel regression. The results show that positive tone management correlates significantly with DPO exceeding industry norms, particularly for buyers with strong legal or technical reputations. This effect diminishes when supply chain monitors (common auditors and analysts) are present. Our study offers three contributions: (1) bridge operations-finance research by showing how qualitative disclosures distort supply chain financial dynamics; (2) advance tone management literature by revealing how reputable firms exploit linguistic manipulation more effectively, and (3) offer practical solutions by highlighting the need for suppliers to incorporate tone analysis in credit evaluations, and suggest institutional monitors can help mitigate information asymmetry in trade credit relationships.