The Systematic Risk Behavior in the Life Cycle Stages of Companies and the Moderating Effect of Managerial Ability

Abstract

Firm characteristics influence systematic risk and, according to life cycle theory, these characteristics change over the life cycle following a predetermined pattern. Therefore, changes in systematic risk are expected following a predicted pattern. Given the different nature of companies and the different abilities of managers in various industries and different stages of the life cycle, it can be assumed that systematic risk in different industries and the ability to manage to affect this relationship. Therefore, the purpose of this paper is to investigate the systematic risk behavior over the life cycle and the moderating role of management ability. So, the systematic risk of 124 companies listed on the Stock Exchange during the years 2011-2017 and during different stages of the life cycle using three models of Anthony and Ramesh (1992), Dickinson (2010) and Saravia et al. (2016) and methodology Data were analyzed by simple regression and T-Student. The results show that corporate life cycle risk behaves differently in some industries such as basic steel and sugar and food industries except sugar. The management ability as a moderator relationship over the whole company rather than industry-level is effective in this relationship.