Abstract
We find a nonlinear relation between corporate lifecycle and default risk. Default risk is significantly higher for growth and decline firms when compared to mature firms, after controlling for firm specific and macroeconomic factors on default risk. The shorter distance to default for introduction firms vis-a-vis mature firms are, however, mostly explained by known determinants of default risk. Whereas the 2008 financial crisis adversely impacted all firms, the elevation in default risk was intensified among mature firms. Further results show greater default risk is associated with firms that are lifecycle leaders among their industry peers but is lower for laggards.
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