scholarly journals The Relationship between Implied Cost of Equity and Corporate Life Cycle Stages

2018 ◽  
Vol 12 (2) ◽  
pp. 130-155
Author(s):  
Attaullah Shah ◽  
Khyber Khan ◽  
Muhammad Afraz
Keyword(s):  
Life Cycle ◽  
Cost Of Equity ◽  
Life Cycle Stages ◽  
Corporate Life Cycle ◽  
The Relationship ◽  
Implied Cost Of Equity

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.

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.

Studying the Relationship between Company Life Cycle and Cost of Equity

2016 ◽  
Vol 6 (2) ◽  
pp. 32-42
Author(s):  
Hossein Karvan ◽  
Shahram Gilaninia ◽  
Keyhan Azadi
Keyword(s):  
Life Cycle ◽  
Cost Of Equity ◽  
The Relationship

Oxygen uptake in a barnacle: scaling to body size from nauplius to adult

1982 ◽  
Vol 60 (6) ◽  
pp. 1231-1235 ◽  
Author(s):  
D. D. Jorgensen ◽  
W. B. Vernberg
Keyword(s):  
Body Weight ◽  
Life Cycle ◽  
Oxygen Uptake ◽  
Naupliar Stage ◽  
Life Cycle Stages ◽  
Stage 1 ◽  
Balanus Eburneus ◽  
Adult Mass ◽  
The Relationship ◽  
Large Adult

We measured the oxygen uptake of the barnacle Balanus eburneus Gould during the following stages of its life cycle: (1) naupliar stages 1, 4 and 6; (2) cyprid; (3) postmetamorphosis adult (pinhead); and (4) large adult. Mass specific oxygen uptake [Formula: see text] increased by 60% during development from naupliar stage 1 to stage 6. An eightfold drop in [Formula: see text] occurred with the molt from stage 6 to cyprid. [Formula: see text] increased by fourfold after metamorphosis of the cyprid into the pinhead, the smallest adult. The slopes of the regression lines describing the relationship between nonmass specific O2 uptake and dry body weight (Wb) were (1) 1.27 for nauplii, (2) 0.87 for large adults, and (3) 0.75 for all life cycle stages studied except cyprids.

Corporate Life Cycle and Cost of Equity Capital

2015 ◽  
Author(s):  
Mostafa Monzur Hasan ◽  
Mahmud Hossain ◽  
Adrian Cheung ◽  
Ahsan Habib
Keyword(s):  
Life Cycle ◽  
Equity Capital ◽  
Cost Of Equity Capital ◽  
Cost Of Equity ◽  
Corporate Life Cycle

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.

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).

scholarly journals The bimodal character of stock distribution

2001 ◽  
Vol 32 (3) ◽  
pp. 11-16
Author(s):  
A. G. Frank
Keyword(s):  
Life Cycle ◽  
Multidimensional Scaling ◽  
Monthly Basis ◽  
Corporate Life Cycle ◽  
Time Changes ◽  
Degree Of Differentiation ◽  
Relationship Of ◽  
The Relationship ◽  
Over Time ◽  
Growth Probability

The bimodal character of stocks is demonstrated when they are classified according to their style. Stocks are often assigned, on the basis of some valuation parameter, uniquely as either value or growth even though, over time, changes in a stock’s-growth probability should trace the evolution of the corporate life cycle. This study is concerned with investigating the relationship of that probability to market cycles. Two hundred and eighty eight stocks from the ASEAN are tracked over an eight-year period. The percentages of those, on a monthly basis, that are in the top quintile of EPS growth, as well as the top quintile of major value (current) styles are calculated. Using multidimensional scaling, the study concludes that the degree of differentiation between growth and value rises as the market declines, and that styles are purer at the bottom than at the top of the market cycle.

Studies on the relationship between Eimeria acervulina and Eimeria mivati

Parasitology ◽  
1973 ◽  
Vol 67 (2) ◽  
pp. 143-155 ◽  
Author(s):  
P. L. Long
Keyword(s):  
Life Cycle ◽  
Chorioallantoic Membrane ◽  
Distinct Species ◽  
Cross Protection ◽  
Eimeria Acervulina ◽  
Size And Shape ◽  
Life Cycle Stages ◽  
Shape Characteristics ◽  
High Degree ◽  
The Relationship

Two strains each of Eimeria acervulina and Eimeria mivati were examined for their ability to develop in the chorioallantoic membrane (CAM) of chicken embryos and the caeca of chickens. It was found that between 100 and 1000 times more sporozoites of E. acervulina were needed to produce infections in the caeca and the embryo CAM respectively. The reproduction of both species in infections of chickens was similar and a high degree of cross-protection occurred.It was found that oocysts of E. mivati differed in size and shape depending upon whether they were produced from infections of embryos or chickens. When maintained by passage in chickens they assumed size and shape characteristics of E. acervulina.These findings, with the known similarity of the life-cycle stages, pathogenicity and pathology, indicate that E. mivati is not sufficiently different from E. acervulina to be a distinct species. It is suggested that it is best referred to as E. acervulina var. mivati.

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