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Do corporate policies follow a life-cycle?

journal contribution
posted on 01.08.2016, 00:00 authored by R Faff, W C Kwok, Edward PodolskiEdward Podolski, G Wong
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.

History

Journal

Journal of banking and finance

Volume

69

Pagination

95 - 107

Publisher

Elsevier

Location

Amsterdam, The Netherlands

ISSN

0378-4266

Language

eng

Publication classification

C1 Refereed article in a scholarly journal; C Journal article

Copyright notice

2016, Elsevier