Impact of Ownership Patterns and Firm Life-Cycle Stages on Firm Performance: Evidence From India

2018 ◽  
Vol 29 (1) ◽  
pp. 117-136 ◽  
Author(s):  
Srividhya Sridharan ◽  
Medha Joshi
Keyword(s):  
Life Cycle ◽  
Firm Performance ◽  
Firm Life Cycle ◽  
Life Cycle Stages ◽  
Ownership Patterns

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 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.

scholarly journals Firm life cycle and advisory directors

2017 ◽  
Vol 43 (4) ◽  
pp. 575-592 ◽  
Author(s):  
Ahsan Habib ◽  
Md. Borhan Uddin Bhuiyan ◽  
Mostafa Monzur Hasan
Keyword(s):  
Life Cycle ◽  
Boards Of Directors ◽  
Cash Flows ◽  
Jel Classification ◽  
Mature Stage ◽  
Board Structure ◽  
Allocation Of Resources ◽  
Firm Life Cycle ◽  
Life Cycle Stages ◽  
Australian Sample

This article investigates whether the presence of advisory directors and monitoring directors varies across firm life cycle stages. We follow a parsimonious life cycle proxy based on the predicted behaviour of operating, investing and financing cash flows across the different life cycle stages that result from firm performance and the allocation of resources. Using an Australian sample, this study shows that compared to mature-stage firms, firms in the introduction, shake-out and decline stages have more advisory directors. With respect to the demand for monitoring directors, we find that compared to mature-stage firms, firms in the introduction, shake-out and decline stages have fewer monitoring directors on the board. We contribute to the literature on boards of directors by documenting that firms choose an optimal board structure based on their economic characteristics. JEL Classification: D22, G38, M14

Structuring and Bundling Resources for Innovation in Different Firm Life Cycle Stages

2014 ◽  
Vol 2014 (1) ◽  
pp. 13726
Author(s):  
Francesco Chirico ◽  
Christina M. Carnes ◽  
Dong Wook Huh ◽  
Michael A. Hitt ◽  
Vincenzo Pisano
Keyword(s):  
Life Cycle ◽  
Firm Life Cycle ◽  
Life Cycle Stages

Do idiosyncratic risk, market risk, and total risk matter during different firm life cycle stages?

2020 ◽  
Vol 537 ◽  
pp. 122550 ◽  
Author(s):  
Farrukh Shahzad ◽  
Zeeshan Fareed ◽  
Zhenkun Wang ◽  
Syed Ghulam Meran Shah
Keyword(s):  
Life Cycle ◽  
Idiosyncratic Risk ◽  
Market Risk ◽  
Total Risk ◽  
Firm Life Cycle ◽  
Life Cycle Stages

scholarly journals The Relationship between Corporate Social Responsibility Reporting and Firm Performance and the Moderating Role of Firm Life Cycle Stages: Evidence from China

2021 ◽  
Vol 13 (18) ◽  
pp. 10038
Author(s):  
Naveed Jan ◽  
Arodh Lal Karn ◽  
Zeyun Li ◽  
Xiyu Liu
Keyword(s):  
Corporate Social Responsibility ◽  
Life Cycle ◽  
Firm Performance ◽  
Social Responsibility ◽  
Csr Reporting ◽  
Life Cycle Stages ◽  
Corporate Social Responsibility Reporting ◽  
Corporate Social ◽  
Moderating Role

This study aims to investigate the relationship of firm performance and corporate social responsibility reporting and the moderating role of a firm’s life cycle stages in Chinese listed companies. We used the sample of all A-share listed firms on the Shanghai and Shenzhen stock exchanges for the period 2010 to 2020. The authors used pooled ordinary least squares (OLS) regression as a baseline methodology. Our regression results show that positive Corporate social responsibility (CSR) activity significantly reduces the performance of the firm. In addition, the negative link between positive Corporate social responsibility and a firm’s performance is more pronounced for firms in mature life cycle stages. Our results are robust to alternative proxy measures of ROA for firm performance, corporate social responsibility reporting, and life cycle stages. To control the possible problem of endogeneity, we use a one-year lag and 2SLS least squares regression. We find that firm performance has a statistically significant influence on CSR reporting. Moreover, we see that firms with high performance are more likely to report CSR activities than low-performance firms. Additionally, six out of ten control variables (Independent Director, Board Shares, State Owned Enterprise, Board Meeting, Chief executive officer Duality, and Firm Growth) have positive influences on CSR reporting. These findings hold for a set of robustness tests. Our results have implications for the development of CSR reporting in developing countries such as China. Our research suggests that, in China, firms with better financial performance undertake more CSR reporting. This paper contributes to the existing literature by investigating the effect of firm performance on CSR reporting and the moderating role of a firm’s life cycle stages in Chinese listed companies. Additionally, this paper enriches the current literature on CSR reporting and highlights the importance of a firm’s financial performance for better environmental performance and reporting.

scholarly journals The effect of firm life cycle on profitability: Evidence from Jordanian firms

2021 ◽  
pp. 1919-1926
Author(s):  
Abdullah Aldaas
Keyword(s):  
Life Cycle ◽  
Performance Measure ◽  
Mature Stage ◽  
Current Ratio ◽  
Firm Life Cycle ◽  
Life Cycle Stages ◽  
Time Period ◽  
Panel Data Regression ◽  
Data Regression ◽  
The Impact

Profitability is an important performance measure and a related study based on the life cycle of firms is appreciated by researchers and managers. The impact of the financial crisis adds novelty to such research. This study discusses the impact of financial ratios on profitability of firms under the influence of financial crises. It is based on a sample of 42 Jordanian firms and uses panel data regression on an annual dataset for the time period 2000-2018. The study found mature stage firms to be explained best with the suggested model. The impact of current ratio on the profitability of all companies was observed as positive while the profitability is found to be negatively affected by debt for all life cycle stages except for the declining stage. Also, it is found that the declining stage firms need to rely on debt to stay profitable and sustain.

Outside directors, firm life cycle, corporate financial decisions and firm performance

2021 ◽  
pp. 100820
Author(s):  
Jubran Alqahtani ◽  
Lien Duong ◽  
Grantley Taylor ◽  
Baban Eulaiwi
Keyword(s):  
Life Cycle ◽  
Firm Performance ◽  
Outside Directors ◽  
Financial Decisions ◽  
Firm Life Cycle
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