Abstract
In this paper we test the relationship between life-cycle stages and revenue predictability. We used three-year revenue divided by average total assets as the revenue predictability. Our life-cycle estimation is based on Dickinson’s (2011) cash-flow proxy model. Instead of using dummy variables and omitted the category with least observations, following Hansen et al. (2018), we assigned values of 0, 0.25, 0.50, 0.75, and 1 for the stages of introduction, growth, mature, shake-out, and decline, respectively. We used firm/year fixed effects regression to estimate our model. Our empirical evidence points out that companies' revenue predictability increases as the revenue volatility decreases.
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