The Impact of Internationalization on Firm Value: The Moderating Role of Firm Life Cycle

Abstract

Purpose - The purpose of this study is to investigate the firm value of the level of internationalization for each life cycle stage of a firm. In this study, the firm’s life cycle is divided into the growth stage, maturity stage, and decline stage, and the effect of the level of internationalization on the firm value according to the firm life cycle is analyzed. Design/Methodology/Approach - Based on the sample of 5,646 (firm-year) manufacturing firms listed on the domestic stock market from 2002 to 2019, a regression analysis was conducted to empirically test the research hypotheses. Findings - The results showed that the relationship between the internationalization level and the firm value in the entire sample was statistically not significant. However, the moderating effect of the firm life cycle on the value relevance of the internationalization level was confirmed that an integrated model including the intersection of the internationalization level and the firm life cycle was estimated. As a result, the growth stage has a moderating effect on the relationship between the firm value and the level of internationalization. Research Implications - This paper contributes to existing research in that it analyzed the relationship between the level of internationalization and the firm value for each firm life cycle, which was not considered in previous studies, and is expected to provide useful academic and practical implications.