Firm’s Life Cycle Spurs the Dividend Payments: A Fallacy or an Actuality?

Paradigm ◽  
2019 ◽  
Vol 23 (1) ◽  
pp. 36-52
Author(s):  
Jasminder Kaur
Keyword(s):  
Life Cycle ◽  
Predictive Power ◽  
Maturity Stage ◽  
Sample Period ◽  
Dividend Payment ◽  
Independent Variables ◽  
Decline Phase ◽  
Dividend Payments ◽  
Life Cycle Stages ◽  
Firm’S Life Cycle

The study aims at testing the predictive power of life cycle proxies during the five life cycle stages in performing the accurate prognosis of dividend decisions of Indian companies. S&P BSE 500 companies have been selected for the study, and the sample period of 11 years commencing from 1 January 2005 to 31 December 2015 is taken. Life cycle of the firm is classified into five stages—introduction, growth, maturity, shake-out and decline phase. Cash flow patterns form the premise of such classification. All the four independent variables—size of company, proportion of cumulative retained profits as of total equity, total equity to total asset ratio and return on total assets (ROA)—turn out to be significant contributors in professing the occurrence of dividend payment event at the maturity stage of the firms’ life cycle.

scholarly journals Firm Life Cycle and Investment Inefficiency

2020 ◽  
Vol 3 (2) ◽  
pp. 169-184
Author(s):  
Amelia Graciosa ◽  
Gracia Gracia ◽  
Rita Juliana
Keyword(s):  
Life Cycle ◽  
Cash Flow ◽  
Stock Exchange ◽  
Life Cycles ◽  
Free Cash Flow ◽  
Maturity Stage ◽  
Investment Performance ◽  
Life Cycle Stages ◽  
The Government ◽  
Firm’S Life Cycle

This paper investigates whether the firm's life cycle stages carry out free cash flow efficiently or not before their investment performance. We utilize cash flow patterns to classify firms into five several life cycles stages. Our data consists of non-financial firms listed in Indonesia Stock Exchange from 2008-2018. We find evidence that Indonesian firms in the introduction, growth, and shakeout stage are underinvesting. This paper also shows that firms in decline stage are overinvested. The characteristic of the mature firm includes that firms with high cash flow will tend to overinvest. However, contrasting with mature firms' common characteristics, our results show that Indonesian firms in maturity stage tend to underinvest. The results also imply that the government should acknowledge the existence of Indonesian firms' investment inefficiency problem. Overall, this paper contributes to the literature by providing empirical evidence on Indonesia's investment inefficiency phenomena. It is suggested that further research may select a different method in calculating growth opportunities and may also study private firms since it tends to have higher financial constraints.

scholarly journals Busy Boards, Firm Performance and Operating Risk

2020 ◽  
Vol 16 (2) ◽  
pp. 1-21
Author(s):  
Kin-Wai Lee ◽  
Char-Lee Lok
Keyword(s):  
Life Cycle ◽  
Firm Performance ◽  
Stock Returns ◽  
Life Cycle Stage ◽  
Maturity Stage ◽  
Return On Assets ◽  
Listed Firms ◽  
Multiple Directorships ◽  
Operating Risk ◽  
Firm’S Life Cycle

Using a sample of listed firms in Malaysia, Philippines, Singapore and Thailand, this article examines the association between busy board of directors and firm performance. We offer three results. First, we find that firm performance (measured by operating profitability and market-to-book equity) is negatively associated with busy boards. Second, we find that firms with busy boards have higher operating risk (measured by volatility of return on assets, volatility of stock returns and volatility of operating cash flow). Third, we find that the association between firm performance and busy boards is conditional on the firm’s life cycle stage. For firms in the growth stage, busy boards are beneficial to firm performance suggesting that the experience knowledge and reputation accumulated with multiple directorships help busy directors to more effectively advise these firms. In contrast, for firms in the maturity stage of their life cycle, busy boards are detrimental to firm performance suggesting the monitoring role of board is weakened by multiple directorships.

scholarly journals Capital Structure Decision during Firm’s Life Cycle: with Reference of Top Companies Listed in Bse 500 Operating in India in Terms of the Market Capitalization

2019 ◽  
Vol 8 (4) ◽  
pp. 6685-6692
Keyword(s):  
Life Cycle ◽  
Capital Structure ◽  
Early Stage ◽  
Order Theory ◽  
Maturity Stage ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Market Capitalization ◽  
Flow Generation ◽  
Firm’S Life Cycle

Researchers have always made laudable contribution in examining the factors that influence an individuals and business firms to adopt and maintain the capital structure decision during a firm’s life cycle. The research methodology is carried out to examine the financing choices of top 100 firms in terms of the market capitalization through a close outlook with the business life cycle. The determinant of capital structure decision is based on profitability, liquidity, nature of industry, timing and timing of issue. Debt is taken as a fundamental source in an early stage where as in maturity stage, firm re-balance their capital structure gradually substituting debt for internal capital. This study aims to generate an idea of a dynamic evolution of the firm across the different stages, investment/disinvestment needs, profitability, cash flow generation and risk changes. Moreover, the study is carried out with a comprehensive analysis of the firm’s capital structure and the main elements in the classical theories, i.e. Trade off Theory and Pecking Order Theory.

The dividend signaling hypothesis and the corporate life cycle

2020 ◽  
Vol 46 (12) ◽  
pp. 1569-1587
Author(s):  
Narcisa Meza ◽  
Anibal Báez ◽  
Javier Rodriguez ◽  
Wilfredo Toledo
Keyword(s):  
Life Cycle ◽  
Growth Stages ◽  
Content Type ◽  
Future Earnings ◽  
Life Cycle Stages ◽  
Dividend Signaling ◽  
Corporate Life Cycle ◽  
Firm’S Life Cycle ◽  
Signaling Hypothesis ◽  
The Relationship

PurposeThis paper aims to examine the relationship between the dividend signaling hypothesis and a firm's life cycle.Design/methodology/approachThe authors use Dickinson's (2011) methodology to develop a proxy for the firm's stages in its life cycle and to examine the relationship between dividends and future earnings following a nonlinear setting.FindingsUsing a sample of US firms during the 2000–2014 period, the authors find that the signaling hypothesis can be dependent on firm-specific characteristics, such as life cycle stages. The authors report that the relationship between dividend changes and subsequent earnings changes is different for different life stages. They also find that changes in the amount of the dividend provide some information about future earnings, especially during the early (introductory and growth) stages. These results are consistent with the use of earnings or return on assets as the dependent variables in models of earnings expectations.Originality/valueThe authors believe that this is the first time that the dividend signaling hypothesis has been linked to the life cycle of the firm.

scholarly journals Academic Assets, Life-Cycle, and Entrepreneurship: A Longitudinal Study of Estonian Academic Workers

2021 ◽  
Vol 7 (2) ◽  
pp. 113
Author(s):  
Maksim Mõttus ◽  
Oliver Lukason
Keyword(s):  
Life Cycle ◽  
Academic Entrepreneurship ◽  
Academic Career ◽  
Academic Staff ◽  
Academic Discipline ◽  
Academic Life ◽  
Firm Creation ◽  
Independent Variables ◽  
Life Cycle Stages ◽  
Practical Implications

This study aimed to find out how academic assets are interconnected with firm creation by academic staff at different academic life-cycle stages. The applied theoretical setting integrated resource-based and life-cycle explanations of academic entrepreneurship. A longitudinal whole population dataset of Estonian academic workers was applied, with a dependent variable reflecting firm creation, and independent variables representing different academic assets. The logistic regression results indicated the varying importance of different academic assets at different academic career stages, while divergence also exists with respect to academic discipline. The results enable postulating several theoretical propositions, accompanied by practical implications for technology transfer at universities.

scholarly journals PERBANDINGAN SIKLUS HIDUP PRODUK DOTA 2 DAN CS:GO BERDASARKAN STRATEGI EVENT MARKETING

2019 ◽  
Vol 10 (1) ◽  
pp. 1-24
Author(s):  
Reynaldi Dwi Junianta ◽  
Sanaji Sanaji
Keyword(s):  
Life Cycle ◽  
Product Life Cycle ◽  
Growth Stage ◽  
Secondary Data ◽  
Maturity Stage ◽  
Product Life ◽  
Event Marketing ◽  
Life Cycle Stages ◽  
The Difference ◽  
Cook Model

The purpose of this research is to get the Product Life Cycle’s phase from Dota 2 and CS:GO based on Polli and Cook model and to know the difference of impact of Marketing Event Dota 2 and CS:GO strategy on Product Life Cycle Dota 2 and CS:GO. The method of this research is qualitative. The data used are secondary data collected through documents on the internet. The data processed by the Polli and Cook formulas to produce the Product Life Cycle stages and data on Event Marketing both games are collected and compared each criteria. The results show that product life cycle both online games can be proved by Polli and Cook model. At each stage the two games have different strategies. Dota 2 Product Life Cycle stages are: 1) the introduction phase starts and ends in July 2012; 2) the growth stage starts in July 2012 and ends in November 2012; 3) the maturity phase starts in December 2012 until now. CS:GO Product Life Cycle stages are: 1) introduction phase starts and ends in August 2012; 2) the growth stage starts in August 2012 and ends in January 2014; 3) the maturity stage starts in February 2014 until now.

scholarly journals Financial and economic characteristics of the organization's life cycle

2020 ◽  
Vol 82 (3) ◽  
pp. 246-252
Author(s):  
Y. A. Salikov ◽  
N. N. Krivtsova
Keyword(s):  
Life Cycle ◽  
Life Cycle Stage ◽  
Point Of View ◽  
Economic Indicators ◽  
Maturity Stage ◽  
Business Organization ◽  
Economic Activities ◽  
Stage Of Development ◽  
Life Cycle Stages ◽  
Key Aspects

One of the most acceptable scientific and methodological approaches to work in difficult economic conditions is regular and targeted management of the life cycle of a business organization as an open social and economic system. Any system develops and changes, passing through typical stages or cyclic states of its development. Studying the enterprise from the point of view of the life cycle allows to increase efficiency of financial and economic activity exactly at the specified stage and in due time to develop measures on prevention or weakening of negative and increase of positive results. The analysis of scientific researches has allowed to define the "life cycle of an enterprise" as a quantitatively limited set of stages or states within which the enterprise is during its existence and development. With regard to the functioning of a business organization, the following stages of its life cycle have traditionally been identified: creation, growth, maturity and crisis. Depending on the stage of the life cycle, a business organization should focus on various aspects of its financial and economic activities. Development of a business organization is to ensure the transition from the first and second stages to the third, and the longest possible retention (maturity stage) with timely identification of signs of the fourth stage (crisis) in order to prevent it by retaining the existing positions, returning to the second stage, diversification or transition to a new life cycle. Each stage of development has its key aspects on which management should focus to achieve and maintain positive financial and economic performance. Correspondence of life cycle stages and financial and economic priorities gives grounds for development of the system of financial and economic indicators and formation of limits of their permissible fluctuations within each stage. Based on the values of financial and economic indicators and their dynamics, it is possible, firstly, to contribute to more accurate diagnostics of the life cycle stage of a business organization; secondly, to improve the efficiency of a business organization at each stage by adjusting the values of indicators within the optimal ranges and applying adequate managerial impacts.

Commentary: Exploiting and Exploring New Opportunities over Life Cycle Stages of Family Firms

2011 ◽  
Vol 35 (6) ◽  
pp. 1199-1205 ◽  
Author(s):  
Pramodita Sharma ◽  
Carlo Salvato
Keyword(s):  
Life Cycle ◽  
Family Firms ◽  
Sustainable Performance ◽  
Life Cycle Stages ◽  
Multiple Levels ◽  
Firm’S Life Cycle ◽  
Over Time ◽  
Opportunity Creation

Family firms vary with regards to success achieved in terms of opportunity creation and exploitation over time. Elaborating on this variation, this commentary argues that firms that simultaneously engage in multiple levels of innovation—incremental, progressive, and radical—are likely to enjoy sustainable performance advantages across generations. Toward this end, a strategic split of innovation responsibilities between family and nonfamily professionals is likely to be useful, contingent on the firm's life cycle and size. In terms of entrepreneurial expertise, a combination of causal and effectual thinking is necessary to ensure exploitation of already discovered or created opportunities and exploration of new ones.

scholarly journals Financial Architecture in the Different Life Cycle Stages

2018 ◽  
Vol 11 (4) ◽  
pp. 11-35
Author(s):  
Anastasia Stepanova ◽  
Izabella Kazaryan
Keyword(s):  
Regression Analysis ◽  
Life Cycle ◽  
Capital Structure ◽  
Ownership Structure ◽  
Transition Period ◽  
Maturity Stage ◽  
Financial Architecture ◽  
Life Cycle Stages ◽  
Primary Sample ◽  
A Company

In this article, we consider the relation between capital structure, corporate governance, ownership structure and performance of a company depending on its life cycle stages.  The central aim of this study is to define the most sustainable and effective types of financial architecture by using the cluster and regression analysis. This study describes the three stages of the life cycle of a company: the first stage is growth, followed by maturity and finally the stage of decline, but for our research we only examine companies in the maturity stage. The research includes 11 countries from emerging markets and the primary sample includes 4,675 non-financial companies from 2011 to 2015. As the measure of a company’s performance, we used Tobin’s Q coefficient and total shareholder return. The primary sample was divided into the 3 life cycle stages by using the approach of comparing the growth rates of revenues at the average rate of revenue growth in the industry (Cao, 2010); however, we did not consider the earlier stages of the life cycle due to the specificity of the sample. A cluster analysis was performed on the sample for the growth and maturity stages in order to show the difference between the clusters that depends on the life cycle stages. We analyzed the clusters’ sustainability by regression analysis in each cluster. We described the influence of the financial architecture component on market performance. The results indicate more than one sustainable cluster and demonstrate the influence of the ownership structure, capital structure and the board characteristics on the company’s efficiency depending on the stage of the life cycle, which proves there is a need to take into account the issues of the life cycle. The managers and directors of a company can use results of this study when developing a company’s strategy, especially during the transition period from one life cycle to another.

scholarly journals Corporate life cycle and cash holding decisions: A South African study

2020 ◽  
Vol 17 (4) ◽  
pp. 102-110
Author(s):  
Trust Chireka
Keyword(s):  
Life Cycle ◽  
South African ◽  
Firm Size ◽  
Cash Holdings ◽  
Cash Holding ◽  
Resource Based View ◽  
Life Cycle Stages ◽  
Corporate Life Cycle ◽  
Firm’S Life Cycle ◽  
Corporate Cash Holdings

The resource-based view theory suggests that as firms’ resource bases differ along the corporate life cycle, even corporate policies such as cash holdings vary along the life cycle. This study seeks to understand the effect of firm’s life cycle on corporate cash holding behavior. Previous literature has sought to investigate the firm and institutional determinants of corporate cash holdings. Using the resource-based view theory, this study investigates whether corporate life cycle can be another determinant of corporate cash holdings. A panel data analysis of a sample of 112 Johannesburg Stock Exchange (JSE) listed firms from 2011 to 2018 is utilized to determine if firm’s life cycle does influence cash holding behavior. Dickinson’s cash flow analysis is used to proxy life cycle stages and control other known determinants of corporate cash holdings such as firm size, leverage, profitability, dividend payments, and growth opportunities. Contrary to other studies, this study finds no significant relationship between life cycle stages and corporate cash holdings, suggesting that corporate cash holdings for South African firms are driven by other factors other than life cycle resource allocations. However, it is found that prior year cash balances, firm size, and profitability have significant positive relationships with cash holdings. It is also found that liquid asset substitutes, leverage, and investment opportunities exert a significant and negative influence on corporate cash holdings.

Sign in / Sign up

Export Citation Format

Share Document