Do corporate policies follow a life-cycle?

Faff, Robert W.; Kwok, Wing Chun; Podolski, Edward J.; Wong, George

doi:10.1016/j.jbankfin.2016.04.009

Cited by 154 publications

(235 citation statements)

References 67 publications

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“…In contrast to the intuition underlying these prior studies, recent findings indicate that firms issue more debt and have higher levels of leverage in the introduction and growth stage than in the other life cycle stages despite the major impact of future growth opportunities on firm value in early-stage firms (Black 1998;Dickinson 2011;Faff et al 2016). These findings reflect the evolvement of both financing and investment needs over the firm life cycle: While substantial investments in new capital and innovation are necessary to benefit from the growth opportunities available to firms in the introduction and growth stage, the limited availability of internal funds in these stages increases the need for external financing to undertake these investments (Faff et al 2016).…”

Section: Debt Contracting Over the Firm Life Cyclementioning

confidence: 82%

“…After reconfirming the importance of debt financing in earlystage firms (cf. Faff et al 2016), I find that these firms prefer public over private debt. This finding provides support for the "Rent Extraction hypothesis".…”

Section: Introductionmentioning

confidence: 80%

“…Dickinson (2011) proposes and validates a life cycle proxy that is based on the pattern in firms' cash flows. Since operating, investing and financing policies evolve over the firm life cycle in a predictable way, the pattern observed in the cash flows from operating, investing and financing activities allows for the classification of firms into the different life cycle stages (Dickinson 2011;Faff, Kwok, Podolski and Wong 2016). While the cash flows of operating activities are still negative in the introduction stage as it takes time before sales outpace the investments in working capital related to the introduction of new products, these become positive in the growth and mature stage after the products have been successfully introduced to the market.…”

Section: Measuring Firm Life Cyclementioning

confidence: 99%

“…Examples include the impact of firm life cycle on dividend policies (DeAngelo et al 2006); investment, financing, and cash policies (Faff et al 2016); compensation policies (Drake and Martin 2015); and acquisition behavior (Arikan and Stulz 2016). In this dissertation, I extend the firm life cycle concept to a capital market setting by examining whether and, if so, how the behavior of various capital market participants differs across life cycle stages.…”

Section: Figure 12 Financial and Information Flows In A Capital Markmentioning

confidence: 99%

“…When firms move to the other stages of the firm life cycle, the accumulation of profits in the mature stage and declining investment opportunities reduce the need to obtain additional financing from external capital providers (DeAngelo, DeAngelo and Stulz 2006;Dickinson 2011). Recent findings indeed show that both net equity issuance and net debt issuance increase in the introduction and growth stage of the firm life cycle but decrease as firms move to the other end of the life cycle spectrum (Faff, Kwok, Podolski and Wong 2016).…”

Section: Introductionmentioning

confidence: 97%

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The role of firm life cycle in the functioning of capital markets

Hamers

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ACKNOWLEDGEMENTS Veni, vidi, sed magnum erat tempus quo dissertationem finivi.When I decided to embark on this journey, a simple yet -as quickly turned out -naïve and overconfident extrapolation of the time I spent on writing my Master's thesis suggested that it would be possible to finish my PhD within one and a half years. What followed was a threeyear adventure with both ups and downs, great and insightful learning experiences at both the academic and the personal level, and many memorable and enjoyable moments. Most importantly, however, it was the company and support of many unique people that made this journey unforgettable. Some of them have already accompanied me for a longer period of time (or even for my entire life so far); some of them I only met at the beginning of this journey; some of them have crossed my path while I was on my way and either walked along or decided -expectedly or unexpectedly -to choose a different path instead; but all of them have helped me -implicitly or explicitly -to reach the point where I stand today. As such, I am grateful to each and every one of them.First and foremost, I would like to express my eternal gratitude towards my daily supervisors (and co-promotors), Annelies Renders and Patrick Vorst. Annelies, whereas many people are fans of, for instance, pop artists or movie actors/actresses, I immediately became a fan of you when you were my tutor in International Financial Accounting. I have always been impressed by your clear and easy-to-understand explanations and your enthusiasm was -and still is -contagious. My dissertation has benefited immensely from your constant support, guidance and genuine interest -not only in my research but also in me as a person. From the moment we first met, you have been my leading example of how a teacher and supervisor should be. Patrick, you are a different story. From a "what-does-not-kill-you-makes-youstronger"-attitude towards you, I really learned to appreciate your immense knowledge and research talent as time passed. Initially, my -or, potentially better, "our" -stubbornness limited the extent to which I was willing to listen to your great comments and suggestions.1 Yet, as we were strolling through New York City one day, I realized that we both made a lot of progress over the past three years -I as a PhD student and you as a PhD supervisor -and I dare to say that my dissertation would not have been in its current final state without your involvement, company and support during conferences, and helpful comments and suggestions. While I have so far focused on the two of you in isolation, in my opinion you were at your very best when you were together. For me, the two of you were the best supervisor team I could have wished for and I honestly hope that many future PhD students can experience (and enjoy) your joint supervision! Further, I would like to thank my promotor, Frank Moers, for his guidance and support during my PhD. Frank, even though you were not intensively involved in my day-to-day activities, you were always willing...

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Section: Debt Contracting Over the Firm Life Cyclementioning

confidence: 82%

Section: Introductionmentioning

confidence: 80%

Section: Measuring Firm Life Cyclementioning

confidence: 99%

Section: Figure 12 Financial and Information Flows In A Capital Markmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 97%

See 3 more Smart Citations

The role of firm life cycle in the functioning of capital markets

Hamers

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The mediating mechanism of earnings management on the relationship between life cycle and financial reporting quality: Finding from MRA and fsQCA

Khương

Anh

2022

Bus Strat Dev

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The study examined the relationship between organization life cycle (OLC) and financial reporting quality (FRQ) in the Vietnamese context with the mediating role of earnings management (EM). We used estimation OLS, fixed effects model, and other robustness tests to validate the results on a sample of 408 Vietnamese listed companies over the period 2010–2017. In addition, we compare the regression results with a recently established approach is, fuzzy‐set qualitative comparative analysis (fsQCA). The multiple regression analysis results suggest that firms with low profits or poor financial performance have low‐quality financial statements. On the other hand, when firms mature or have significant retained earnings, the quality of financial information improves and peaks. Besides, throughout the OLC, real earnings management behaviors are less likely to be used than accruals earnings management. Finally, because of the mediating effect of EM, the influence of OLC on FRQ is increased. The fsQCA findings indicate complex configurations between OLC, EM and other controls factors to the outcome of FRQ. This research contributes empirical evidence to the scientific literature on accounting and corporate governance. Next, the main contribution of our study is the examination of mediating role of EM on OLC‐FRQ association through both regression analysis and the fsQCA approach. Additionally, we conducted this study in Vietnam, where the legal framework in protecting the investors is still not complete; this will significantly contribute to the literature overview of OLC and FRQ.

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How does a firm's life cycle influence the relationship between carbon performance and financial debt?

2021

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In a progressively more stringent regulatory context concerning greenhouse gas emissions derived from a growing awareness of how economic activity affects our environment, this study analyzes how the firm's life cycle affects the relationship between carbon performance and financial debt. Using panel data on a sample of European listed firms during the 2005-2018 period, we find evidence suggesting that firms with better carbon performance have greater access to external financing during their growth stages and lesser access during maturity, although it has no effect during the shake-out stage. Furthermore, carbon performance has a strong positive effect during growth, maturity, and shake-out when firms need to finance additional tangible investments. We also find that the negative relationship between liquidity and debt is reversed during innovative stages for firms with better carbon performance. Our results are robust to the use of alternative measures of life cycle stages and to the consideration of industrial, legal, and cultural contexts.

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Do corporate policies follow a life-cycle?

Cited by 154 publications

References 67 publications

The role of firm life cycle in the functioning of capital markets

The role of firm life cycle in the functioning of capital markets

The mediating mechanism of earnings management on the relationship between life cycle and financial reporting quality: Finding from MRA and fsQCA

How does a firm's life cycle influence the relationship between carbon performance and financial debt?

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