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 THE EFFECTS OF LIFE CYCLE AND FREE CASH FLOW ON DIVIDEND OF AGRICULTURAL COMPANIES THAT LISTED IN INDONESIA STOCK EXCHANGE

2020 ◽  
Vol 9 (2) ◽  
pp. 121
Author(s):  
Helma Malini ◽  
Venu Fitratama
Keyword(s):  
Life Cycle ◽  
Cash Flow ◽  
Firm Size ◽  
Negative Impact ◽  
Stock Exchange ◽  
Free Cash Flow ◽  
Investment Opportunity ◽  
Dividend Payout ◽  
Independent Variables ◽  
Investment Opportunity Set

Company decision to give profits to their investors is based on several reasons including internal policy from the company. Therefore, this study discusses the effects of life cycle and free cash flow on dividend of agricultural companies that listed in Indonesia stock exchange. Independent variables; used are free cash flow, life cycle, firm size, leverage, assets growth, and investment opportunity set. The population in this study is Agricultural company listed on Indonesia Stock Exchange (BEI) in the period of 2015 - 2018. The sample collected using purposive sampling methods. Total of 21 companies were determined as samples. The method of analysis in this study is panel data regression with basis on fixed effect model. The result of this study indicate that the independent variables of free cashflow, life cycle, firm size, leverage, and investment opportunity set have positive impact toward dividend payout ratio while assets growth has negative impact on dividend payout ratio. The result of determination coefficient shows that the independent variables give affect 63.69% against dependent variable.Keywords: Free cash flow, Life cycle, Firm size, Leverage, Assets growth, Investment opportunity set, Dividend payout ratio, Dividend policy

scholarly journals Corporate Social Responsibility dan Free Cash Flow pada Tax Avoidance

2021 ◽  
Vol 31 (5) ◽  
pp. 1069
Author(s):  
Ni Putu Sintia Sukma Dewi ◽  
I Gusti Ayu Made Asri Dwija Putri
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Cash Flow ◽  
Stock Exchange ◽  
Linear Regression Analysis ◽  
Tax Avoidance ◽  
Free Cash Flow ◽  
Manufacturing Companies ◽  
The Government ◽  
Corporate Social

Tax avoidance is the taxpayers effort to reduce tax payments to the government made by taxpayers, especially companies because they do not violate regulations regarding taxation. This study aims to examine the effect of corporate social responsibility and free cash flow on tax avoidance which is proxied by using the cash effective tax rate (CETR). This research was conducted at manufacturing companies listed on the Indonesia Stock Exchange for the 2016-2019 period. The sample used was 68 companies with a total observation sample of 272  in 4 years. The data analysis technique used in this study is multiple linear regression analysis. Based on the results of the study show that corporate social responsibility has no effect on tax avoidance and free cash flow has a positive effect on tax avoidance. Keywords: Corporate Social Responsibility; Free Cash Flow; Tax Avoidance.

scholarly journals Market reaction and fundamental signal in Indonesia

2017 ◽  
Vol 14 (3) ◽  
pp. 210-217
Author(s):  
Winston Pontoh
Keyword(s):  
Life Cycle ◽  
Cash Flow ◽  
Capital Market ◽  
Market Reaction ◽  
Stock Exchange ◽  
Flow Theory ◽  
Free Cash Flow ◽  
Share Prices ◽  
Life Cycle Theory ◽  
Good Signal

The random reaction in capital market by different perceptions and other factors makes it difficult for investors to get their optimum return. The objective of this study is to provide an empirical evidence about how the market will react by fundamental signal from the perspective of life cycle theory, free cash flow theory, and bird in the hand theory. The study presents the analysis of covariate for hypotheses testing with 241 firms as the sample which are listed in Indonesia Stock Exchange for period 2010–2015. This study finds that the life cycle theory and free cash flow theory are not absolute theories to explain the market reaction for any firms, because each firm has its own characteristics. The findings show that share prices shall react differently depending on each characteristics of the firm. The bird in the hand theory seems applicable in any case of firms, since the informational contents by dividend can deliver good signal to investors in capital market. Excluding the smaller and younger firms, this study proves that dividend is still a better way in determining the reaction of share prices, since each type of firms has its own types of dividend payers with different share prices.

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 Conditions of Economic Efficiency of Industrial Enterprises in the Enterprise Life Cycle Stages

2019 ◽  
Vol 12 (3) ◽  
pp. 287-301
Author(s):  
Joanna Żurakowska-Sawa
Keyword(s):  
Life Cycle ◽  
Economic Efficiency ◽  
Stock Exchange ◽  
Maturity Stage ◽  
Internal Factors ◽  
Enterprise Life Cycle ◽  
Industrial Enterprises ◽  
Life Cycle Stages ◽  
State Economy ◽  
Warsaw Stock Exchange

SummarySubject and purpose of work: The purpose of the study is to determine the variables determining the level of synthetic measure of economic efficiency in listed companies of the industry sector as part of their enterprise life cycle.Materials and methods: The article uses data from annual unitary financial statements of industrial enterprises according to the classification of the Warsaw Stock Exchange and data describing the macroeconomic situation of the state economy. The research period covered the years 1999-2012. In order to examine which factors determine the level of economic efficiency at each stage of the life cycle of enterprises, estimation of econometric models was carried out.Results: In the models obtained for companies in the growth and maturity stage, statistically significant determinants were obtained only in the field of internal factors. In the models estimated for companies in the stages of launch, shake-out and decline, statistically significant conditions were identified, both in terms of external factors and in the area of internal factors.Conclusions: A comprehensive assessment of the conditions for the level of economic efficiency of enterprises should take into account both factors dependent on the enterprise (microeconomic) as well as those determined by the environment (macroeconomic) and beyond its control. It is therefore necessary for managers of enterprises to have extensive and up-to-date knowledge of factors and conditions that are significant in shaping the level of economic efficiency.

scholarly journals Free Cash Flow, Debt Policy and Profitability: Analysis the Investment Opportunity Set

2021 ◽  
Vol 6 (4) ◽  
pp. 157-162
Author(s):  
Putri Dwi Wahyuni
Keyword(s):  
Cash Flow ◽  
Quantitative Research ◽  
Stock Exchange ◽  
Secondary Data ◽  
Free Cash Flow ◽  
Investment Opportunity ◽  
Profitability Analysis ◽  
Investment Opportunity Set ◽  
The Government ◽  
Debt Policy

The main purpose of investors investing in the capital market is to earn profits in the future. Investment is an alternative investment. If investors have excess funds, they will not let their funds idle. Funds can be invested in various forms, such as buying certain assets that tend to increase in price such as equipment, land, or gold or in the form of time deposits in banks, buying stocks and bonds in the financial market. The research objective to be achieved is to provide understanding and knowledge to the public, especially investors and creditors regarding free cash flow, debt policy, profitability and investment opportunity sets that can be used as a reference for further researchers as well as a reference for stakeholders (investors, creditors, and the government) in making decisions. relevant and reliable. The method used is quantitative research with secondary data taken from financial statements at idx with data collection techniques using purposive sampling method. Analysis of the data used is multiple linear regression with panel data. The population in this study is the property and real estate sub-sector listed on the Indonesia Stock Exchange, which was carried out for 3 years of observation, namely 2017-2019 totaling 120 data with 40 companies per year. The results showed that only the debt policy variable proxied by the debt equity ratio had a significant effect on the investment opportunity set, while the free cash flow and profitability variables proxied by the return on assets had an insignificant effect on the investment opportunity set.

scholarly journals Capital Structure Decision and Firm’s Life Cycle-A Study on Non-Financial Sector of Pakistan

2016 ◽  
pp. 1-18
Author(s):  
Sonia Zafar Et al.,
Keyword(s):  
Life Cycle ◽  
Capital Structure ◽  
Emerging Economies ◽  
Stock Exchange ◽  
Practical Implication ◽  
Financial Sector ◽  
Policy Makers ◽  
Leverage Ratio ◽  
Life Cycle Stages ◽  
Firm’S Life Cycle

The basic aim of this study is to distinguish the ratio of capital structure at different life cycle stages of a firm. Literature is rich in discussing the determinants of capital structure and its influence on the performance of a firm. However; the association of capital structure decision with respect to the life cycle stages is less investigated especially in the emerging economies. Therefore, in order to investigate the choice of leverage ratio during a firm’s life cycle, 107 firms from the non-financial sector of Pakistan Stock Exchange for the period of ten years i.e. 2004- 2013 are selected. A deterministic approach is used to classify the life cycle stages as presented by Miller and Friesmen (1984). Panel data methodology is used to analyze the capital structure decision with respect to firm’s life cycle. The results indicate that the leverage of a firm has a significant relation with the age of the firm, especially for the older firms. It will have a practical implication for the policy makers to focus on the easy availability of finance at younger stages of a firm as they feel financial constraints during their early life cycle.

Dividend Payout Ratio: Persoalan Free Cashflow, Debt To Equity Ratio, Kepemilikan Institutional, Investment Opportunity, Dan Kesejahteraan Karyawan

Liquidity ◽  
2017 ◽  
Vol 6 (1) ◽  
pp. 1-11
Author(s):  
Nurlis Azhar ◽  
Helmi Chaidir
Keyword(s):  
Cash Flow ◽  
Significant Influence ◽  
Stock Exchange ◽  
Institutional Ownership ◽  
Free Cash Flow ◽  
Manufacturing Companies ◽  
Flow Ratio ◽  
Prediction Ability ◽  
Employee Welfare ◽  
Equity Ratio

This study was conducted to examine the effect of Free Cash Flow Ratio, Debt Equity Ratio (DER), Institutional Ownership, Employee Welfare and Price Earning Ratio (PER) to Divident Payout Ratio (Parliament) partially on manufacturing companies listed on Indonesia Stock Exchange period 2011-2015. In addition, to test the feasibility of regression model, the influence of Free Cash Flow Ratio, Debt Equity Ratio (DER), Institutional Ownership, Employee Welfare and Price Earning Ratio (PER) to Divident Payout Ratio (DPR) simultaneously at manufacturing company listed on Bursa Indonesia Securities period 2011-2015. The population in this study are 146 manufacturing companies that have been and still listed in Indonesia Stock Exchange period 2011-2013. The sampling technique used was purposive sampling and obtained sample of 42 companies. Data analysis technique used is by using multiple linear regression test. The results showed that Free Cash Flow Ratio, no significant effect on Divident Payout Ratio (DPR). Debt Equity Ratio (DER) has a negative and significant influence on Divident Payout Ratio (DPR), Institutional Ownership has a significant positive effect on Divident Payout Ratio (DPR), Employee Welfare and Price Earning Ratio (PER) has a positive and significant influence on the Divident Payout Ratio ). Simultaneously Free Cash Flow Ratio, Debt Equity Ratio (DER), Institutional Ownership, Employee Welfare and Price Earning Ratio (PER) give effect to Divident Payout Ratio. The prediction ability of the five variables to the Divident Payout Ratio (DPR) is 21.3% as indicated by the adjusted R square of 0.271 while the remaining 79.7% is influenced by other factors not included in the research model.

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