scholarly journals Corporate Life Cycle and the Explanatory Power of Risk Measures versus Performance Measures

2011 ◽  
Vol 2 (6) ◽  
pp. 199-206 ◽  
Author(s):  
Hamed Omrani ◽  
Saber Samadi . ◽  
Ahmad Kazemi Margavi . ◽  
Hamid Asadzadeh . ◽  
Hemad Nazari .
Keyword(s):  
Life Cycle ◽  
Performance Measures ◽  
Regression Models ◽  
Stock Exchange ◽  
Risk Measures ◽  
Explanatory Power ◽  
Financial Information ◽  
Mature Stage ◽  
Life Cycle Stages ◽  
Corporate Life Cycle

The major aim of this paper is to compare the explanatory power of risk measures versus performance measures in different life-cycle stages. To test the hypotheses, first, sample firms were classified into three life-cycle stages (Growth, Mature and Decline). Then, using regression models and Vuong's Z-statistic, the hypotheses were investigated. In this study, financial information of 75 firms which were accepted at Tehran’s Stock Exchange (TSE) from 2003 to 2008 (450 firm-years) was examined. The results of this study show that in growth and decline stages, the explanatory power of risk measures is significantly higher than performance measures and in mature stage, the opposite is true.

The Impact of the Corporate Life‐Cycle on the Value‐Relevance of Disaggregated Earnings Components

2004 ◽  
Vol 3 (4) ◽  
pp. 5-20 ◽  
Author(s):  
David S. Jenkins ◽  
Gregory D. Kane ◽  
Uma Velury
Keyword(s):  
Life Cycle ◽  
Value Relevance ◽  
Mature Stage ◽  
Strategic Actions ◽  
Stock Market Reaction ◽  
Earnings Components ◽  
Life Cycle Stages ◽  
Corporate Life Cycle ◽  
The Impact ◽  
Earnings Change

We investigate the relative roles of key components of earnings change in explaining the value relevance of earnings across different life‐cycle stages of the firm. We hypothesize that firms in different life‐cycle stages take different strategic actions: change in sales is emphasized in the growth and mature stages, while in later stages, profitability is emphasized. Because payoffs to such strategies vary across the life‐cycle, the stock market reaction to the success firms have in employing these strategic actions is likely to vary across the life‐cycle. To test our hypotheses, we disaggregate changes in earnings into three key components: earnings change from change in sales, earnings change from change in profitability, and an interaction term comprising both sales change and profitability change. Our findings are consistent with our hypotheses: when firms are in the growth stage, the value‐relevance of change in sales is relatively greater than that of change in profitability. In the mature stage, the value relevance of change in profitability increases, relative to that of change in sales. When firms are in stagnant stage, the value‐relevance of changes in profitability are relatively greater than that of change in sales. Collectively, the results demonstrate a shift in the value relevance of earnings components from a growth emphasis early in the life‐cycle to a profitability emphasis later in the life‐cycle.

scholarly journals TINGKAT MANAJEMEN LABA PADA BERBAGAI TAHAP SIKLUS HIDUP PERUSAHAAN DI INDONESIA

2020 ◽  
Vol 1 (2) ◽  
pp. 311-328
Author(s):  
Amelia Hartono ◽  
Muhammad Hadyan ◽  
Rinaningsih ◽  
Retno Yuliati
Keyword(s):  
Life Cycle ◽  
Earnings Management ◽  
Growth Stage ◽  
Stock Exchange ◽  
Mature Stage ◽  
Public Companies ◽  
Management Level ◽  
Anova Model ◽  
Life Cycle Stages ◽  
Significant Difference

This research is conducted to examine the differences in earnings management level at various company life cycle stages in Indonesia, especially for public companies which listed on Indonesia Stock Exchange from 2002 to 2016. This research uses a sample of 4,400 observational data which obtained by purposive sampling from Capital IQ. To determine the stage of the company life cycle, this research uses Dickinson's (2011) model criteria by dividing the company life cycle into five stages: introduction, growth, mature, shake-out, and decline. This research is tested with the ANOVA model and proves that there is a significant difference in the level of earnings management in the decline, introduction, and shake-out companies compared to the growth stage. However, the results of this study proves that the value of earnings management in growth and mature stage companies are not significantly difference.

scholarly journals Capital Structure Theories and Speed of Capital Adjustment towards Target Capital Structure along Life Cycle Stages of Asian Manufacturing Firms

2020 ◽  
Vol 6 (1) ◽  
pp. 53-62
Author(s):  
Muhammad Sajid Amin ◽  
Hashim Khan ◽  
Imran Abbas Jaddon ◽  
Muhammad Tahir
Keyword(s):  
Life Cycle ◽  
Capital Structure ◽  
Manufacturing Firms ◽  
The Other ◽  
Mature Stage ◽  
Costs And Benefits ◽  
Speed Of Adjustment ◽  
Capital Adjustment ◽  
Life Cycle Stages

Purpose: Firms have different costs and benefits and asymmetric information across their life cycle stages and hence each stage has different financial pattern and speed of adjustment towards target capital. Methodology: We use System GMM to test the hypotheses. We use market leverages proxies for the capital structure, life cycle proxies: introduction, growth, mature, shakeout and decline and the control determinants of capital structure such as profitability, tangibility, firm size and growth opportunities. We estimate the financial pattern and speed of adjustment along life cycle stages of manufacturing firms from eleven Asian economies over the period of 2010-2018. Findings: The results show that firms in earlier stages have more long term debt than mature stage. The speed of adjustment towards target capital structure is highest in mature stage than the other stages. The control determinants significantly affect market leverages. Implications: The findings suggest that management has to consider life cycle stages of their firms in order to adjust capital structure. Stockholders should consider stage of firm with relation to profitability and capital structure for long term prospects.

scholarly journals Governance and the corporate life-cycle

2015 ◽  
Vol 11 (1) ◽  
pp. 23-43 ◽  
Author(s):  
Thomas O'Connor ◽  
Julie Byrne
Keyword(s):  
Corporate Governance ◽  
Life Cycle ◽  
Prediction Model ◽  
Design Methodology ◽  
Emerging Market ◽  
Content Type ◽  
Emerging Market Countries ◽  
Life Cycle Stages ◽  
Corporate Life Cycle ◽  
Resource Strategy

Purpose – The purpose of this paper is to examine whether corporate governance changes along the corporate life-cycle. Design/methodology/approach – In a sample of 205 firms from 21 emerging market countries and using a life-cycle proxy from the dividends literature, the authors use a governance-prediction model which examines whether corporate governance differs along the corporate life-cycle. Findings – Mature firms tend to practice better overall corporate governance. Discipline and independence improve as firms mature. Firms tend to be most transparent and accountable when they are young. These findings suggest that the resource/strategy and monitoring/control governance functions are relevant but at different life-cycle stages. Research limitations/implications – In the absence of longitudinal governance data with sufficient coverage to track within-firm changes in corporate governance along the corporate life-cycle, the authors analyze differences in corporate governance between-firms at different life-cycle stages. Originality/value – The authors use an alternative, yet new measure from the dividends literature to account for the firm’s position along the corporate life-cycle. With this new measure, the findings are in line with the predictions of Filatotchev et al. (2006).

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.

The Corporate Life Cycle and the Cost of Equity

2019 ◽  
Vol 14 (1) ◽  
Author(s):  
Sergio Bravo
Keyword(s):  
Life Cycle ◽  
Cash Flow ◽  
Cost Of Capital ◽  
Theory And Practice ◽  
Cost Of Equity ◽  
Firm Life Cycle ◽  
Link Type ◽  
Life Cycle Stages ◽  
Corporate Life Cycle ◽  
The Cost

Abstract A widely used methodology for estimating the beta of companies with the Capital Asset Pricing Model (CAPM) uses comparable firms based only on industry or sector classifications (Bancel, F., and U. R. Mittoo. 2014. “The Gap between the Theory and Practice of Corporate Valuation: Survey of European Experts.” Journal of Applied Corporate Finance 26, no. 4 (Fall): 106–17. doi:https://doi.org/10.1111/jacf.12095, 112; KPMG. 2017. “Cost of Capital Study 2017: Diverging Markets, Converging Business Models.” Accessed September 28, 2018. https://assets.kpmg.com/content/dam/kpmg/ch/pdf/cost-of-capital-study-2017-en.pdf, 37). We hypothesize that even within industries, there is a significant relationship between the cost of equity and the life cycle of a firm. We argue that these variables are correlated because different life-cycle stages exhibit different degrees of systematic risk. Therefore, as the firm moves along its life cycle, its unlevered beta decreases. We define the stages of the firm life cycle based on a modification of the theoretical typology of (Miller, D., and P. Friesen. 1984. “A Longitudinal Study of the Corporate Life-Cycle.” Management Sciences 30 (10): 1161–83. http://www.jstor.org/stable/2631384, 1162–3) and then classify a sample of listed companies into these stages using (Dickinson, V. 2011. “Cash Flow Patterns as a Proxy for Firm Life-Cycle.” The Accounting Review 86 (6): 1969–94. doi:https://doi.org/10.2308/accr-10130) cash flow statements methodology. We construct value-weighted portfolios that are formed based on our life-cycle stages classification, adapting the procedure of (Fama, E., and K. R. French. 1993. “Common Risk Factors in the Returns on Stocks and Bonds.” Journal of Financial Economics 33 (1): 3–56. doi:https://doi.org/10.1016/0304-405X(93)90023-5). Finally, we compare the betas (levered and unlevered) of these portfolios to determine whether there are statistically significant differences. Our results show clear evidence of a relationship between betas and the corporate life cycle and that this relationship is robust to both changes in the period of analysis and omitted variables bias (when controlling with the four-factor model of (Carhart, M. M. 1997. “On Persistence in Mutual Fund Performance.” The Journal of Finance 52 (1): 57–82. doi:https://doi.org/10.1111/j.1540-6261.1997.tb03808.x). We believe our results show an important shortcoming in a widely used methodology among practitioners for estimating the CAPM.

scholarly journals The Influence of Cash Flow Patterns on Random Organizational Development in Nigerian Listed Companies

2020 ◽  
Vol 11 (3) ◽  
pp. 171
Author(s):  
Chizoba Ekwueme ◽  
Rosemary Obiageri Obasi ◽  
Sadiq Rabiu Abdullahi ◽  
Umar Aliyu Mustapha ◽  
Norfadzilah Rashid
Keyword(s):  
Life Cycle ◽  
Cash Flow ◽  
Developmental Stages ◽  
Stock Exchange ◽  
Listed Companies ◽  
Life Cycle Stage ◽  
Flow Patterns ◽  
Annual Reports ◽  
Mature Stage ◽  
Growth Stages

The objective of this study is to examine whether companies’ life cycle stages follow a random or sequential developmental pattern using their cash flow patterns. That is to ascertain the optimum life cycle stage of Nigerian companies. Data were obtained from the sampled firms annual reports and accounts, which comprises 79 listed companies on the Nigerian Stock Exchange (NSE) from 2009 to 2013 financial years. The cash flow patterns of the firms were thematically analysed as a proxy of developmental patterns, and transition rates between developmental stages were determined. The study reveals that Introduction firms at T0 transited quickly to the Mature stage (70% in T1 through T3), whereas Growth firms developed most rapidly into Shakeout firms (38% at T1). The Mature stage was most stable; 57–65% of firms in this stage at T0 remained so. By contrast, 60% of Decline firms remained in this stage at T1 before transiting to the Mature and Growth stages at T3 and then ultimately fading away at T4, leaving only the Introduction (20%) and Decline (20%) stages. Thus, the development of firms from one life cycle stage to another is random and not sequential. The study, therefore, recommends that Nigerian companies experience their optimum life cycle stage at the matured stage and firms should employ the use of cash flow patterns to identify their business life cycle stage as this will enable companies to apply strategies to sustain themselves at a target stage of the life cycle.

scholarly journals Pengaruh Siklus Hidup Perusahaan Terhadap Konservatisme Akuntansi

2019 ◽  
Vol 1 (4) ◽  
pp. 1794-1809
Author(s):  
Yonia Efrilita ◽  
Salma Taqwa
Keyword(s):  
Life Cycle ◽  
Stock Exchange ◽  
Secondary Data ◽  
Total Sample ◽  
Accounting Conservatism ◽  
Mature Stage ◽  
Manufacturing Companies ◽  
Start Up ◽  
Negative Effect ◽  
Positive Effect

This study aims to analyze the effect of the company's life cycle that covers the stage of start-up, growth, and mature to accounting conservatism.  Population in this study are manufacturing companies listed in Indonesia Stock Exchange(IDX) in 2013 to2017 period. The sample of study was determined by using purposive sampling method, and that total sample 54 manufacturing companies. In this study, conservatism was measured using accrual earnings measure. The life cycle of companies is measured using cash flow patterns. The data used is secondary data obtained from www.idx.co.id. The analytical method used is the panel regression analysis with Eviews 8 software. The results showed of this study indicate that the life cycle of the company at the start-up stage and growth stage has negative effect on accounting conservatism. The life cycle  at mature stage has a positive effect on accounting conservatism.  

scholarly journals ENGARUH BIAYA KEAGENAN, TAHAP DAUR HIDUP PERUSAHAAN, KEBIJAKAN DIVIDEN TERHADAP NILAI PERUSAHAAN DENGAN KEBIJAKAN UTANG SEBAGAI VARIABEL PEMODERASI PADA PERUSAHAAN MANUFAKTUR YANG TERDAFTAR DI BEI

2018 ◽  
Vol 3 (2) ◽  
pp. 172
Author(s):  
Muhammad Yasfi ◽  
Kurniawan Ali Fachrudin
Keyword(s):  
Life Cycle ◽  
Firm Value ◽  
Stock Exchange ◽  
Agency Cost ◽  
Managerial Ownership ◽  
Manufacturing Companies ◽  
Best Interest ◽  
Firm Life Cycle ◽  
Life Cycle Stages ◽  
Debt Policy

One of the company's main objective was to enhance firm value through increased prosperity of the owners or shareholders. The separation of ownership from management in corporation creates agency problem. Managers who run companies and usually do not have stock ownership may not act in the shareholder’s best interest because they maximize their own wealth.The objective of this research was to examine whether there was an effect of agency cost (dispersion of ownership and managerial ownership), firm life cycle stages, and dividend policy on firm value with debt policy as moderating variable. The population of the study is the manufacturing companies that registered in Indonesian Stock Exchange in the period of 2002–2012. Samples of 88 observations are selected using purposive sampling method. The analysis method of this research was simple regression and Moderated Regression Analysis (MRA).The result showed that dispersion of ownership and firm life cycle stages can influence firm value. The result also showed that debt policy can moderating dispersion of ownership influence firm value.

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