Faff, Robert, Kwok, Wing Chun, Podolski, Edward J. and Wong, George 2016, Do corporate policies follow a life-cycle?, Journal of banking and finance, vol. 69, pp. 95-107, doi: 10.1016/j.jbankfin.2016.04.009.
We examine whether corporate investment, financing, and cash policies are interdependent and follow a predictable pattern in line with the firm life-cycle. We find that investments and equity issuance decrease with firm life-cycle, while debt issuance and cash holdings increase in the introduction and growth stages and decrease in the mature and shake-out/decline stages of the firm's life-cycle. These results are robust after using various proxies for life-cycle and controlling for firm, CEO and board level characteristics. Collectively, our results show that corporate policies follow a firm life-cycle.
Field of Research
150201 Finance 0102 Applied Mathematics 1502 Banking, Finance And Investment
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