scholarly journals The Impact of Internal Cash Holdings, Debt Ratio on Relationship between the Disposal Assets and Value Relevance of Firm: The Decline of Firm in Life-Cycle Stages

2016 ◽  
Vol null (65) ◽  
pp. 1-28
Author(s):  
Woen Park ◽  
kim ye kyoung
Keyword(s):  
Life Cycle ◽  
Value Relevance ◽  
Cash Holdings ◽  
Debt Ratio ◽  
Life Cycle Stages ◽  
The Impact

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 The value relevance of R&D and free cash flow in an efficient investment setup

2019 ◽  
Vol 4 (1) ◽  
pp. 95-111
Author(s):  
Waqas Bin Khidmat ◽  
Man Wang ◽  
Sadia Awan
Keyword(s):  
Life Cycle ◽  
Value Relevance ◽  
Accounting Information ◽  
Free Cash Flow ◽  
Investment Efficiency ◽  
Content Type ◽  
Book Value ◽  
Listed Firms ◽  
Life Cycle Stages ◽  
The Impact

Purpose The purpose of this paper is to investigate the value relevance of Research and development (R&D) and free cash flow (FCF) in an efficient investment setup. Most importantly, this paper examines whether the value relevance of R&D and FCF is associated with life cycle stages. Furthermore, this paper reports whether the market response to R&D and FCF is different in competitive market as compared to the concentrated market. Design/methodology/approach The analysis is based on the Ohlson (1995) model for the determination of value relevance of earnings and book value. Capitalized R&D and FCF data comprising of the Chinese A-listed firms from the year 2008 to 2016 are selected for this study. Following Anthony and Ramesh (1992), the authors divided the firm life cycle into different stages. HHI index is used to measure the product market competition. Findings The main result shows that R&D and FCF are value relevant in Chinese A-listed firms. The impact of R&D and FCF on the value relevance of earnings and book value is also positive and significant. The findings of the effect of R&D and FCF on the value relevance of accounting information signify that the information content (R2=0.46) of the mature stage is higher than that of the growth and stagnant stage. The explanatory power measured by R2 value for competitive industries (0.47) is much higher than the concentrated industries (0.33). Research limitations/implications Despite taking into account all the possible available variables, there are few limitations of the study. This study only studies the effect of EPS, BPS, R&D and FCF on the value relevance of accounting information. Other determinant such as size, growth, leverage and firm age is ignored. Since the R&D expenditure is discretionary, therefore the findings cannot be generalized to all the sectors. A sector wise comparative study can be done in future, to understand the differences in the information contents of R&D and FCF. Also, the tax effect of R&D is ignored in this study. For future call, the value relevance of tax effect on R&D can be explored. Practical implications The investors can now determine the present value of all the future cash flows of investing activities. The results of the study are significant for the Chinese investors who should incorporate the R&D and FCF along with investment efficiency. The investors should keep in mind the life cycle stage while investing in a certain stock. The competitive markets have more information content than the concentrated markets. The corporate managers can benefit from this study while issuing new shares. The market responds positively to the stock having investment efficient R&D and FCF investment. For the policy implication perspective, the security market regulator should devise the effective pro-effective product market regulations. Originality/value The contribution of this study is manifold. First, according to the authors’ knowledge, this is the first study that incorporates investment efficiency with R&D and FCF and explores its effect on the value relevance of accounting information. Second, the impact of R&D on the value relevance is studied by numerous researchers (Lev and Sougiannis, 1996; Han and Manry, 2004). Similarly, FCF-agency cost effect has also been investigated by (Rahman and Mohd-Saleh, 2008; Chen et al., 2012) but the value relevance of R&D and FCF during different life cycle stages still needs to be answered. Finally, this study also tries to answers the question if the market response to R&D and FCF is different in a competitive market as compared to the concentrated market.

scholarly journals A study of the impact of information disclosure quality on the efficiency of corporate investment—Based on civil engineering listed companies

2020 ◽  
Vol 198 ◽  
pp. 03032
Author(s):  
Liying Zhang
Keyword(s):  
Life Cycle ◽  
Civil Engineering ◽  
Listed Companies ◽  
Investment Efficiency ◽  
Disclosure Quality ◽  
High Quality ◽  
Life Cycle Stages ◽  
Quality Disclosure ◽  
The Impact

Most of the existing studies on the impact of disclosure quality of listed companies on the investment efficiency of enterprises are based on the static level, and the article investigates the evolution of disclosure quality on the investment efficiency of enterprises from the dynamic level by dividing the life cycle of enterprises. Taking the data of Shenzhen civil engineering companies from 2013-2017 as the research sample, it uses multiple regression analysis to empirically test the impact of disclosure quality of listed companies on the investment efficiency of enterprises at different life cycle stages. The results show that when no distinction is made between life cycle stages, high quality disclosure can significantly inhibit the inefficient investment behavior of firms; in the growth and maturity samples, high quality disclosure can significantly inhibit underinvestment and overinvestment; in the recessionary samples, high quality disclosure can significantly inhibit underinvestment and has no significant effect on overinvestment.

IFRS adoption, financial reporting quality and cost of capital: a life cycle perspective

2019 ◽  
Vol 31 (3) ◽  
pp. 497-522 ◽  
Author(s):  
Ahsan Habib ◽  
Md. Borhan Uddin Bhuiyan ◽  
Mostafa Monzur Hasan
Keyword(s):  
Life Cycle ◽  
Financial Reporting ◽  
Cost Of Capital ◽  
Reporting Quality ◽  
Financial Reporting Quality ◽  
Cost Of Equity ◽  
Content Type ◽  
Ifrs Adoption ◽  
Life Cycle Stages ◽  
The Impact

Purpose This paper aims to investigate the impact of International Financial Reporting Standards (IFRS) adoption on financial reporting quality and cost of equity. The paper further investigates whether such association varies at different life cycle stages. Design/methodology/approach This paper follows the methodologies of DeAngelo et al. (2006) and Dickinson (2011) to develop proxies for the firms’ stages in the life cycle. Findings Using both pre- and post-IFRS adoption period for Australian listed companies, the paper finds that financial reporting quality reduced and cost of equity increased because of the adoption of IFRS. The paper further evidences that financial reporting quality in the post-IFRS period increased cost of equity. Finally, the paper finds that mature firms produce a better quality of earnings, which result in lower cost of capital. The results indicate that a mature firm was benefited because of the adoption of IFRS. Originality/value The finding of this research is useful to the regulators and practitioners to understand the widespread benefit of IFRS adoption.

Environmental Coordinated Analysis of Corrugated Box Based on LCA

2014 ◽  
Vol 787 ◽  
pp. 152-158
Author(s):  
Xiao Peng Li ◽  
Wei Wang ◽  
Bin Jiang ◽  
Yu Ping Jian
Keyword(s):  
Climate Change ◽  
Life Cycle ◽  
Critical Point ◽  
Circular Economy ◽  
Impact Categories ◽  
Base Paper ◽  
Life Cycle Stages ◽  
The Impact

Corrugated box, as a kind of packaging product in the paper packing industry, fulfills the requirements on China’s circular economy development, and has become one of the most widely adopted containers for modern packing. The analysis of corrugated box has shown that the main affection of corrugated box were respiratory inorganics, climate change and acidification/eutrophication. The critical point has been found in respiratory inorganics which normalization result is 50.64, and the impact categories showed climate change was 898793.5 kg CO2-eq in the system. The serious life cycle stages were the manufacture of base paper and cardboard/corrugated box.

Sign in / Sign up

Export Citation Format

Share Document