scholarly journals Signaling hypotheses of share repurchase – life cycle approach. The case of Polish listed companies

Equilibrium ◽  
2017 ◽  
Vol 12 (2) ◽  
pp. 245 ◽  
Author(s):  
Elżbieta Wrońska-Bukalska ◽  
Bogna Kaźmierska-Jóźwiak
Keyword(s):  
Life Cycle ◽  
Growth Stage ◽  
Value Added ◽  
Payout Policy ◽  
Free Cash Flow ◽  
Mature Stage ◽  
Share Repurchases ◽  
Life Cycle Approach ◽  
Share Repurchase ◽  
Financial Policies

Research background: Payout policy has attracted a great deal of research, how-ever it still has not been satisfactorily explained why corporations repurchase their shares. The most popular explanation for share repurchases is their signaling power. An alternative explanation for share repurchases is related to free cash flow. We assume that both theories are not competitive, due to the fact that the motives for share repurchases may differ depending on the firm’s life cycle stage.Purpose of the article: The aim of the paper is to test the hypotheses that companies in growth stage are more prone to repurchase their shares due to the their undervaluation.Methods: Our analysis focuses on 116 repurchase on WSE and 47 repurchase on NewCon-nect in Poland during the period 2004–2016 to test the hypothesis. We assume that companies listed on WSE are in their mature stage while listed on NewConnect are in the growth stage. We use market value to book the value ratio (M/BV) and the relation of M/BV ratio for the repurchasing company to the M/BV ratio for the whole market at the date of implementing share repurchase program as a proxies for firm valuation.Findings & Value added: Our study does not confirm that repurchased companies at a growth stage are more undervalued than repurchased companies at a mature stage (at statistically significant level), however there are more repurchased companies at a growth stage with lower M/BV value than repurchase companies in mature stage.  Adding corporate life cycle theory into the study, our result can contribute to the literature by more distinctly understanding the motivation of share repurchases. The results might be helpful for companies to determine their financial policies and for investors to determine their investment decisions.

scholarly journals FAKTOR-FAKTOR YANG MEMPENGARUHI PAY OUT POLICY PADA PERUSAHAAN PUBLIK THAILAND

2019 ◽  
Vol 5 (2) ◽  
pp. 57-65
Author(s):  
Ditha Hena Savira ◽  
Agustini Hamid
Keyword(s):  
Life Cycle ◽  
Cash Flow ◽  
Growth Stage ◽  
Free Cash Flow ◽  
Mature Stage ◽  
Public Companies ◽  
The Public ◽  
Panel Data Regression ◽  
Investment Opportunities ◽  
High Investment

We investigate the relationship between Free Cash Flow, Life Cycle and Dividend pay out policy in the Thailand Capital Market. Using panel data regression, we find life cycle and profitability negatively affect the pay out policy. While free cash flow, leverage, firm size, GDP and inflation do not have any impact on pay out policy. In line with DeAngelo, dividends tend to follow the pattern of the company’s life cycle. Companies that are in the mature stage are more likely to pay dividends because at this stage the company has a large amount of profits and low investment opportunities. While companies that are still in the growth stage (growth) are more likely to not pay dividends because at this stage the company has a high investment opportunities, nevertheless they have limited funding. As found in many emerging countries, the Public Companies in Thailand are mostly in growth stage, thus no wonder that profits are used to finance the company’s internal needs

scholarly journals Effectively Serving The Needs Of Todays Business Student: The Product Life Cycle Approach To Class Organization

2012 ◽  
Vol 5 (3) ◽  
pp. 293-302
Author(s):  
Jacqueline K. Eastman ◽  
Maria Aviles ◽  
Mark Hanna
Keyword(s):  
Life Cycle ◽  
Product Life Cycle ◽  
Business Students ◽  
Mature Stage ◽  
Life Cycle Approach ◽  
Product Life ◽  
Millennial Students ◽  
Business Courses ◽  
Learning Rates ◽  
Business Course

We illustrate a class organization process utilizing the concept of the Product Life Cycle to meet the needs of todays millennial student. In the Introduction stage of a business course, professors need to build structure to encourage commitment. In the Growth stage, professors need to promote the structure through multiple, brief activities that can keep the attention of business students. In the Mature stage, professors need to use the structure to stabilize engagement levels and learning rates but be willing to make adjustments to prevent apathy in the course. Finally, in the Decline stage, professors need to dismantle the structure while allowing opportunities for utilizing materials for future business courses and addressing todays millennial students need for achievement and sense of entitlement with the course grades. The value is that this paper illustrates an approach to aid professors in organizing business courses that can be utilized in a variety of courses to better serve millennial students.

scholarly journals Corporate Payout Policy and CEO Compensation Structure

2018 ◽  
Vol 8 (2) ◽  
pp. 179
Author(s):  
Lee-Hsien Pan ◽  
Thomas Barkley ◽  
Shaio-Yan Huang
Keyword(s):  
Ceo Compensation ◽  
Payout Policy ◽  
Free Cash Flow ◽  
Share Repurchases ◽  
Negative Effects ◽  
Total Compensation ◽  
Dividend Payout ◽  
Leverage Ratio ◽  
Compensation Structure ◽  
Investment Projects

This paper examines how corporate payout policy is affected by CEO compensation structure using data from more than 1,600 firms during 1992-2006. Specifically, it studies the effects of CEO compensation structure, firm characteristics, and dividend payout policies on dividend type and relative dividend size.It finds CEO salary is positively associated with cash dividends, share repurchases, and relative dividend size whereas CEO salary (compared to bonus) as a percentage of total compensation has negative effects on cash dividends and share repurchases. It also discovers CEO stock awards as a percentage of total compensation are positively associated with share repurchases and CEO option awards are negatively related to cash dividends.In addition, this paper shows larger firms and firms with more free cash flow distribute more cash dividends and share repurchases. On the other hand, firms with higher leverage ratio and more investment opportunities prefer to save earnings for future re-investment projects. Finally, it show dividend payout policy (either cash dividends or share repurchases) increases relative dividend size. The results of this study suggest that CEO compensation components affect CEOs’ dividend payout decisions: when CEOs’ stock award increases, they prefer to use share repurchases; when CEOs’ option award increases, they prefer not to use cash dividends.

scholarly journals Korean Firms’ Share Repurchase Activities: Firm Characteristics, Financing and Investment

2020 ◽  
Vol 49 (5) ◽  
pp. 643-679
Author(s):  
Jin Park ◽  
Hyunseok Kim ◽  
Jungwon Suh
Keyword(s):  
Cash Flow ◽  
Firm Value ◽  
Univariate Analysis ◽  
Payout Policy ◽  
Share Repurchases ◽  
Share Repurchase ◽  
Listed Firms ◽  
Internal Funds ◽  
Financing And Investment ◽  
Retained Earnings

This study examines Korean listed firms’ share repurchasing activities over the period 2006~2016 using the amount of net share repurchases from annual statements of cash flow. Korean firms use dividends rather than share repurchases as their primary payout method. Each year, the proportion of share repurchasing firms is lower than 20%, whereas the proportion of dividend-paying firms is around 70% or higher. Univariate analysis and Tobit regressions reveal that the incidence and amount of share repurchases increase with firm value, size, and cash flow. Our findings do not suggest that low valuations (or poor stock performance) or low debt ratios motivate share repurchases. Korean firms use primarily internal funds to finance share repurchases, as share repurchasing firms experience substantial increases in retained earnings. Share repurchasing firms do not invest less than other firms do, suggesting that share repurchases do not result in underinvestment. Compared to dividends, share repurchases are more positively associated with firm value. Compared to share repurchase, dividends are more positively associated with cash flow and financial maturity, but more negatively associated with stock return volatility. Finally, firms with high controlling shareholders’ ownership tend to choose dividends over share repurchases in their payout policy.

Linking firms’ life cycle, capabilities, and green innovation

2019 ◽  
Vol 31 (2) ◽  
pp. 284-305
Author(s):  
Adeel Tariq ◽  
Yuosre F. Badir ◽  
Umar Safdar ◽  
Waqas Tariq ◽  
Kamal Badar
Keyword(s):  
Life Cycle ◽  
Growth Stage ◽  
Process Innovation ◽  
Innovation Performance ◽  
Mature Stage ◽  
Technological Capabilities ◽  
Green Process ◽  
Content Type ◽  
Green Process Innovation ◽  
The Relationship

Purpose The purpose of this paper is to investigate the relationship between firms’ life cycle stages (mature vs growth) and green process innovation performance. In addition, this research delineates the mechanism by which the mature stage firms are more strongly associated with green process innovation performance compared to growth stage firms and recognizes technological capabilities as a mediating variable fundamental to achieve a higher level of green process innovation performance. Design/methodology/approach This research collected data from 202 publicly listed Thai manufacturing firms. Initially, it used multiple regression analysis to test the relationship between mature stage firms and green process innovation performance compared to the relationship between growth stage firms and green process innovation performance. Later, this research followed Muller et al. (2005) to test the mediating role of technological capabilities and conducted (Sobel, 1982, 1986; Preacher and Hayes, 2004) tests to further validate the mediation effect. Findings The hypothesized relationships were found to be significant, providing a strong support that mature stage firms have higher green process innovation performance compared with growth stage firms. Moreover, the technological capabilities more strongly mediate the relationship between mature stage firms and green process innovation performance compared to growth stage firms and green process innovation performance. Originality/value This research contributes to the existing understanding about the internal drivers of green process innovation performance by incorporating and analyzing the firms’ life cycle stages as an internal driver. This research also contributes by empirically testing the mediating role of technological capabilities on the relationship between firms’ life cycle stages and green process innovation performance.

scholarly journals The Impact of Business Life Cycle and Performance Discrepancy on R&D Expenditures-Evidence from Taiwan

2017 ◽  
Vol 6 (3) ◽  
pp. 135 ◽  
Author(s):  
Shu-Chin Chang ◽  
She-Chih Chiu ◽  
Pei-Cheng Wu
Keyword(s):  
Life Cycle ◽  
Growth Stage ◽  
Stock Exchange ◽  
Mature Stage ◽  
Maturity Stage ◽  
Taiwan Stock Exchange ◽  
Cycle Growth ◽  
And Performance ◽  
Performance Discrepancy ◽  
The Impact

The purpose of this study is to examine the impact of business life cycle and performance discrepancy on Research and Development (R&D) expenditure. Specifically, we argue that managers of firms in different stages of business life cycle make R&D decisions according to their perception of performance discrepancy. We investigate three stages of business life cycle: growth stage, maturity stage, and stagnant stage. Based on a sample of firms listed in Taiwan Stock Exchange, we find that managers of firms in the growth stage tend to increase R&D expenditure when they experience positive performance discrepancy. This implies that growing firms’ slack-resource-driven behavior is leads to the increase in R&D expenditure. There is some evidence that managers of firms in the mature stage tend to increase R&D spending when they experience negative performance discrepancy, indicate that negative performance discrepancy triggers the problem-driven search behavior of managers of mature firms.

scholarly journals Speed of Adjustment in Dividend Payout Decisions: A Comparative Analysis of Developed and Developing Countries

2019 ◽  
Vol 13 (2) ◽  
pp. 7-24
Author(s):  
Nicos Koussis ◽  
Vladislav Ruzinskii
Keyword(s):  
Payout Policy ◽  
Share Repurchases ◽  
Share Repurchase ◽  
Net Income ◽  
Specific Level ◽  
Financial Modeling ◽  
Speed Of Adjustment ◽  
Working Paper ◽  
Top Managers ◽  
Dividend Smoothing

The analysis of dividends payout policy has been apopular subject of research since the middle of the 20thcentury. Despite a huge number of investigations thereis no consensus opinion as to the best practices in thefield. Over the years, different hypotheses have been putforward proposing various methodologies. Some workingpapers underline share repurchase as the best approachtowards payout policy [1]. On the other hand, there aresome investigations which emphasize the opposite pointof view: that dividends are more preferable [2]. Anotherexplanation states that there is no qualifiable difference intypes of payout policy [3]. However, the majority of recentworking papers argue that the best approach is to combine share repurchases and dividends [4].Academic investigations into payout policy began withLintner’s working paper [5]. This research includes notonly financial modeling and results based on regression analysis, but also presents information concerningthe preferences of top-management in payout policydecisions. As a result of interviews with top managers,Lintner identified the existence of a target value fordividend payouts. So, managers tried to maintain theshare of net income attributed to dividends instead ofthe value of dividends themselves. Moreover, Lintnerfound that there is a pertinent speed of adjustment1individend policy. This phenomenon is described by thefact that in case of significant net income changes, firmsdo not pay all the dividends targeted at a specific level ofnet income. Companies only adjust the level of dividendsin the direction of the changes. Lintner also providedan explanation of this fact. It was noted that companies’top management was sure that significant changes in dividends can be negatively appraised by the stock market,especially in case of a fall in the value of dividends. So,managers understate the changes in dividends to betterassure that next year’s profit can cover the new dividends. However, next year’s net income also incurs somefluctuations, so it it is necessary to make some adjustments to dividends. As a result the process of dividendadjustment becomes permanent.The investigation of Brav et al. [6] also was devoted to theanalysis of payout policy, and included interviews with alarge number of CFOs. This research confirms the mainresults of Lintner’s work, but with some limitations. Thestudy carefully analyzed the existence of any target level inpayout decisions. The authors found that only 6% of CFOsdo not target dividends at all. However, in contrast toLintner’s work the majority of CFOs (approximately 40%)answer that their key target is dividends per share. Only28% try to target a dividends payout, and 27% of managers target dividends per share growth. This investigationshows that nowadays, targeting dividends per share is amore common practice than targeting payouts. Despite the fact that these results display some differences fromLintner’s one, they do not reject the hypothesis aboutexistence of dividend smoothing.

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.

Time and space in business: dynamic geographic concentration and localized industry life cycle

2017 ◽  
Vol 10 (4) ◽  
pp. 374-400 ◽  
Author(s):  
Liang Wang
Keyword(s):  
Life Cycle ◽  
Growth Stage ◽  
Temporal Dynamics ◽  
Mature Stage ◽  
Content Type ◽  
Geographic Concentration ◽  
Industry Life Cycle ◽  
Economic Agglomeration ◽  
Changes Over Time ◽  
Over Time

Purpose The purpose of this paper is to theorize how the industry life cycle unfolds differently across places and how economic agglomeration varies over time. Design/methodology/approach The paper relies on literature review and conceptual analysis. Findings It generates a dynamic geographic concentration model (i.e. an industry’s degree of geographic concentration drops in the growth stage, rises in the mature stage, and drops again in the new growth stage) and a localized industry life-cycle model (i.e. temporal dynamics differ between the center and the periphery). Originality/value It makes contribution by theorizing that the extent to which an industry is geographically concentrated changes over time, and by demonstrating how an industry’s center and periphery may experience different temporal dynamics.

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