Corporate Life Cycle Research Articles

Debt maturity and climate change exposure: does life cycle moderate?

PurposeIn this study, I explore how climate exposure influences debt maturity and whether the life cycle moderates this relationship.Design/methodology/approachThis study employs robust panel fixed-effects regression models on 32,249 firm-year observations over 2002–2022. The meticulous examination of the relationship between climate exposure and debt maturity and the use of IV regression models to address endogeneity ensure the validity and reliability of the findings. Exploiting an external shock to validate the results further enhances the robustness of the analysis.FindingsThe study reveals that climate change exposure significantly negatively affects debt maturity, a finding that holds for both climate-related opportunities and regulatory risks. While the life cycle impacts debt maturity, it exacerbates the negative effect for firms in the introductory and growth phases. This exacerbation is due to underinvestment problems and a lack of financial flexibility. These findings shed new light on the relationship between climate exposure and debt maturity, providing valuable insights for corporate finance professionals and strategic managers.Practical implicationsThe evidence presented in this study has strategic implications for corporate managers, investors, academia and other stakeholders. The insights on the choice or substitution of debt maturity during certain life cycle phases can provide valuable guidance to management, empowering them to make informed decisions.Originality/valueThe dynamic role of the corporate life cycle in the relationship between capital structure and climate exposure is a novel area of research. This paper significantly contributes to our understanding of the combined relationship of firm life cycle and climate exposure on debt maturity, offering a fresh perspective on an underexplored topic. This study’s unique approach and original findings will pique the interest of academic researchers and corporate finance professionals alike.

Environmental protection tax reform and corporate Climate Risk Disclosure

The reform of the environmental protection tax (EPT), a crucial policy instrument for combating climate change, significantly influences corporate climate risk. Hence, a thorough examination of the connection between EPT and corporate climate risk disclosure (CRD) is essential for companies to better evaluate the risks and challenges they encounter. The findings of the research indicate: (1) EPT reform substantially boosts corporate CRD. (2) Mechanism tests demonstrate that EPT enhances corporate CRD via three pathways: increasing public environmental awareness, fostering green innovation, and improving total factor productivity. (3) Heterogeneity analysis shows that various factors such as micro-level corporate characteristics (ownership and corporate life cycle), industry features (high-tech industries and factor intensity), and macro-level aspects (urban location, size, and resource attributes) differentially affect the impact of EPT. (4) Additional analysis from the perspective of institutional investors indicates that a higher proportion of institutional investor holdings amplifies the positive effect of EPT on corporate CRD. These research conclusions aid in accurately assessing the CRD impact of EPT and provide empirical support for policy development and modification.

Periodic information enhancing and controlling stability of complex corporate financial systems

We explore the mechanism and control behavior of how periodic information affects the stability of complex corporate financial systems from two viewpoints: the corporate life cycle and the stability of financial leverage risk. A complex corporate financial system model with correlated noise and periodic driving is proposed. Furthermore, two stability indicators are proposed to measure the stability of the corporate life cycle and the risk of corporate financial leverage. Stochastic simulation results show that enhancing the intensity and frequency of controllable periodic information can improve system stability. The stability of complex corporate life cycles and financial leverage risks exhibits opposite behaviors in terms of noise correlation. In addition, it is observed that there are specific threshold values of system parameters, and the relationship with the intensity of periodic information shows non-monotonic characteristics, manifesting peculiar phenomena and transition behaviors. Finally, by comparing with actual financial data, the proposed model is verified to be superior to the benchmark model.

The impact of data elements marketization on corporate financing constraints: Quasi-experimental evidence from the establishment of data trading platforms in China

Utilizing data from Chinese A-share listed companies from 2010 to 2022, this paper develops a multi-time difference-in-differences model to explore the impact of data elements marketization on corporate financing constraints. Furthermore, we also explore the mediating roles of management effect and information effect and the heterogeneity effect across different companies. The research findings indicate that the marketization of data elements alleviates corporate financing constraints, and the effect varies across companies at different stages of the corporate life-cycle. The research conclusion offers insights for companies, especially those facing financing constraints, to actively engage in the data elements trading market.

기업가적 지향성과 경영성과 간 관계: 기업 수명주기 단계별 차이 분석

This study empirically analyzes the impact of the managerial environment, CEO's vision and strategy, and organizational management system on entrepreneurial orientation in domestic companies, as well as the relationship between entrepreneurial orientation and business performance. Additionally, it examines how these relationships differ across various stages of the corporate life cycle. The analysis utilizes data from the 2022 Entrepreneurial Activity Survey (Company Edition) conducted by the Korea Youth Entrepreneurship Foundation, designated as official statistics by Statistics Korea, which surveyed 3,120 companies. The results of the empirical analysis are as follows First, business environment, vision and strategy are significantly positively related to entrepreneurial orientation. In terms of firm life cycle, we find that firms in the start-up phase are slightly more sensitive to the business environment, while vision and strategy are important regardless of firm life cycle. Second, the operating system of the firm does not have a statistically significant effect on entrepreneurial orientation, and the hypothesis is rejected. It seems that it is important to have an operating system in place from the start-up stage in terms of the business life cycle. Third, a significant positive relationship was found between entrepreneurial orientation and managerial performance, and entrepreneurial orientation had a positive impact on managerial performance regardless of the firm's life cycle. The results of this study expand the factors influencing entrepreneurial orientation and provide theoretical and policy insights by analyzing the corporate life cycle, which is rarely addressed in the field of entrepreneurship, by distinguishing between the startup phase and other phases.

Corporate credit mismatch, financial leverage and corporate investment efficiency

We empirically test the relationship between credit mismatch and corporate investment efficiency. The study analyzes the heterogeneity of mismatch direction, corporate nature, and corporate life cycle. Results reveal that corporate credit mismatch has a significant negative impact on corporate investment efficiency; corporate financial leverage fully mediates this impact, indicating that corporations may increase their financial leverage to bridge financing gaps in cases of credit mismatch. This practice, however, may bring about greater financial risk and affect corporate investment efficiency. This study provides an important reference for enterprises and financial institutions for optimizing the financing environment, ensuring the effective allocation of financing resources, promoting the sustainable development of enterprises, thereby enhancing overall economic efficiency. This study also provides new ideas and future directions for studying corporate financing and investment behavior.

Technological innovation, financing constraints, and carbon reduction in energy companies—From the perspective of the corporate lifecycle

Technological innovation, financing constraints, and carbon reduction in energy companies—From the perspective of the corporate lifecycle

Artificial intelligence innovation and stock price crash risk

AbstractThis study examines the association between artificial intelligence innovation (AII) and stock price crash risk (SPCR). AII serves as a governance mechanism that can bolster strength in internal controls, leading to increased financial transparency and thereby reducing the likelihood of future SPCR. The results hold after accounting for possible endogeneity issues Further, we find that monitoring through corporate governance mechanisms, level of following by equity analysts, and the reduced information asymmetry constitute important channels that mediate the association between AII and SPCR. Additionally, the relationship between AII and SPCR varies across corporate life cycle stages and workplace culture.

Detection of earnings manipulations during the corporate life cycle in Central European countries

Research background: The growing trend of financial distress risk worldwide increases the need for effective tools to detect accounting manipulation by stakeholders (debt holders, shareholders, suppliers, and customers). However, the well-known models of accrual earnings management do not reflect the financial specificity of individual life cycle stages and their cash flow patterns. Purpose of the article: The study examines the impact of the corporate life cycle on the reliability of accrual earnings management models and identifies appropriate models for detecting accounting manipulation in Central European countries. Methods: Seven accrual earnings management models were used. They were evaluated based on five criteria: explanatory power (adjusted coefficient of determination), overall significance of the regression model, significance of the regression coefficients, predicted sign of the regression coefficients, and standard errors of the estimated regression coefficients. Finally, a comprehensive scoring model was used to determine the overall quality of the models examined. The study was conducted on a sample of more than 30,000 enterprises from four Central European countries (the Czech Republic, Hungary, Poland, and Slovakia), with data covering the period 2017–2021. The Dickinson non-sequential life cycle model was used to distinguish life cycle stages according to cash flow patterns. Findings & value added: The results of the study suggest that, firstly, discretionary accruals vary across countries as well as over the firm's life cycle; earnings manipulations have an inverted U-shape with mature firms tending to reduce their accounting profit. The reliability of the models examined was poor in the case of start-ups. This reflects the need to distinguish between life cycle stages in the detection of earnings manipulation.

Impact of sentiment tendency of media coverage on corporate green total factor productivity: The moderating role of environmental uncertainty

In the context of China's carbon neutrality goal and increasing environmental responsibilities, this study examines the impact of media sentiment on Corporate Green Total Factor Productivity (GTFP), especially considering environmental uncertainty. Utilizing data from the CNRDS financial news database and employing the non-radial SBM-ML index to assess GTFP, the research explores how positive, neutral, and negative media coverage influences corporate sustainability behaviors. Results indicate that positive media coverage significantly enhances GTFP during corporate growth and maturation phases by improving public perception and investor confidence. In contrast, negative media coverage tends to reduce GTFP, particularly under conditions of high environmental uncertainty, highlighting the challenges during vulnerable periods. This study contributes to understanding the nuanced effects of media sentiment on corporate sustainability practices and underscores the importance of managing media relations strategically according to corporate lifecycle stages and environmental contexts to optimize sustainability outcomes. The findings offer valuable insights for businesses to align their media strategies with sustainability goals and for policymakers to develop regulations that harness media influence to support corporate environmental accountability. By strategically managing media narratives and fostering a supportive policy environment, corporations can leverage the power of media to drive their sustainability agendas and contribute to the achievement of national and global environmental targets.

Exploration of the *ST Mall Acquisition Event Based on the Theory of Corporate Life Cycle

*ST Mall, a publicly listed company that has gone through multiple development stages, is currently facing severe financial difficulties and industry challenges. Through financial data analysis, it was found that *ST Mall is dealing with issues such as high debts, tight cash flow, and declining profitability. Especially in the recession stage, the financial condition of *ST Mall continues to deteriorate, leading to a significant drop in stock prices. In addition, they are also facing challenges like high market saturation and severe customer loss. The financial events of 2021 have had a profound impact on the company, bringing new financial risks and challenges. To address the current difficulties, the mall urgently needs to take measures to reduce financial risks, improve operational efficiency, closely monitor industry trends, and ensure that the company can effectively deal with future challenges.

Business strategy, green innovation, and carbon reduction performance: evidence from China

This study examines the impact of business strategy on carbon reduction performance (CRP), with a focus on the mediating effect of green innovation and the moderating effect of environmental turbulence. Using a dataset of China’s industrial listed companies spanning from 2010 to 2021, several key findings emerge: First, compared with defenders, prospectors demonstrate a strong inclination toward improving CRP. Second, green innovation acts as a partial mediator between business strategy and CRP. Third, environmental turbulence, which can be divided into market turbulence and technological turbulence, has a heterogeneous moderating effect on business strategy and green innovation; specifically, market turbulence weakens the impact of business strategy on green innovation, while technological turbulence enhances it. Finally, additional research reveals that the positive impact of business strategy on CRP is more pronounced when firms are non-state-owned, operating in heavily polluting industries, and in the mature or declining stages of the corporate life cycle.

Dividend policy in indonesia: evidence from manufacturing companies

This research attempts to identify the factors affecting dividend policy decision. The independent variables of this research are corporate governance (proxied by audit quality and board independence), investment opportunities, collateralizable assets, and company life cycle. Also previous years dividend and profitability as control variables. The population of this research is manufacturing companies listed on the Indonesia Stock Exchange (IDX) during 2018-2022. The sample was selected using purposive sampling methods and 62 sample companies that met the criterias were obtained. The data was analyzed using logistic regression analysis technique. This findings of this research confirm that company life cycle has a positive and significant effect on dividend policy. As companies reach the maturity stage, the propensity to pay dividends increases. Meanwhile, corporate governance, investment opportunities, and collateralizable assets do not affect dividend policy of manufacturing companies. Furthermore, the control variables previous years dividend and profitability have a positive and significant effect on dividend policy of manufacturing companies.

Competitive Strategy Redesign Indonesian Film Industry (Case Study of Perum Produksi Film Negara)

The aim of this research is to analyze the competitive strategy of the Indonesian film industry by testing samples at the State Film Production Company (PFN) as the only state-owned company operating in the film industry. In analyzing the competitive strategy, an analysis was carried out using financial ratio analysis by looking at the financial performance of the State Film Production Company (PFN) for the period 2015 – 2021. Then an assessment was carried out using the Corporate Life Cycle approach to determine the company’s positioning amidst the development of the film industry both at the national and international levels. The type of research used is descriptive with the data source used is secondary data. Secondary data in this research is the Financial Report of Perum PFN for the period 2015 – 2021. The financial ratios used as analytical tools are liquidity ratios, leverage ratios, profitability ratios, activity ratios and market value ratios. Overall research results referring to the company’s financial ratios show that positioning PFN in the Infant category, there is a high probability that the business will die due to lack of sales with negative cash flow conditions. So, in order to be able to compete in the national film industry, it is necessary to redesign appropriate and efficient competitive strategies.

The Nexus between Corporate Lyfe Cycle and Earnings Management at Companies Listed on the Bucharest Stock Exchange

This research investigates the nexus between the corporate life cycle (CLC) and accrual-based earnings management (AEM) and real earnings management (REM) practices. Companies listed on the main segment of the Bucharest Stock Exchange between 2007 and 2021 are analyzed through fixed effects and random effects models. The regression analysis uncovers that earnings management practices vary based on the developmental stage of the company. In the introduction stage, Romanian companies tend to prefer AEM techniques, while in the growth and maturity phases, REM practices are more prevalent. The conditions in which firms operate, the pressure from the capital market and the discretion over costs characteristic of each stage of development explain the preference for a certain method of earnings management. Overall, this investigation helps clarify CLC's role in adopting earnings management techniques (AEM/REM) and signals the need to pay particular attention to the quality of financial reporting of companies in the early stages of development. The findings hold significance for auditors, financial analysts, investors, lenders, and regulators alike.

Testing Corporate Life Cycle Theory: A Multinomial Logistic Regression Approach

Purpose: This article tests the corporate life cycle theory in the context of an emerging market. Design/Methodology/Approach: We use 3179 non-financial Indian firms’ data for the period 2011-2020 to validate the claim. To access the robustness of empirical relationships, we employ multinomial logistic and probit regression models. Findings: The findings indicate that firms’ age follow a non-linear pattern over its life cycle. Firms at the birth and decline stages experienced lower profitability, higher investment opportunities and less likelihood for dividends. Growth firms experiences higher investment opportunities, therefore raising more funds from debt along with paying dividends for reputation building. Furthermore, mature firms with larger size and shrinking investment opportunities, generating cash flows due to higher profitability. Thus, they pay dividend and consider being less risky. For 5 years of out-of-sample data (2016-2020), our model predicts with an average accuracy of 65%. From the perspective of inter-stage transition, firms in the birth and decline stages have a tendency to improve their position, whereas firms in the mature stages are relatively stable in future period. Originality: It seems that very few studies have examined the issue of how the firm characteristics varies over its lifecycle in emerging markets and our research bridges this gap in the literature.

Investor Sentiment, Financing Constraints, and Earnings Persistence

ABSTRACT Based on the background of investor sentiment volatility in the capital market, this article empirically examines the relationship between investor sentiment and corporate earnings persistence and its impact mechanism using a first-order autoregressive model with a sample of Chinese A-share non-financial listed companies from 2007 to 2019. It is found that rising investor sentiment helps improve corporate earnings persistence when investor sentiment is moderate, with financing constraints playing a part in mediating the effect. The test of heterogeneity in corporate life cycle and nature of ownership found that rising investor sentiment significantly mitigates the financing constraints in growth stage and non-state enterprises, which in turn improves their earnings persistence.

Tax planning and financial default: role of corporate life cycle

PurposeDrawing on the resource-based view (RBV), this study investigates how tax planning affects the likelihood of financial default in different stages of the corporate life cycle.Design/methodology/approachCollecting a large sample of US firms between 1989 and 2016, hypotheses are tested using a hazard model. Several robustness and endogeneity checks corroborate the main findings.FindingsThe results show that tax-planning firms are less likely to default in the introduction and decline stages, while they are more likely to default in the growth and maturity stages. The findings suggest that introductory and declining firms use cash resources obtained from tax planning efficiently to meet their needs and acquire other useful resources. In growing and mature firms, tax aggressiveness generates unnecessary slack resources, weakens managerial discipline and increases reputational risks.Practical implicationsThe results shed light on the benefits and costs associated with tax planning throughout firms' life cycle, holding great significance for managers, investors, lenders and other stakeholders.Originality/valueThis study contributes to the literature that examines resource management at different life cycle stages by showing that cash resources from tax planning are managed in distinctive ways in each life cycle stage, having a varied impact on the likelihood of default. The authors shed light on underexplored cash resources. Furthermore, this study shows the potential linkages between the agency theory and RBV.

Corporate Lifecycle and Default Risk

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.

Environmental, Social, and Corporate Governance (ESG), Life Cycle, and Firm Performance: Evidence from China

Interest in firms’ ESG performance is longstanding and growing. However, understanding remains fragmented across firms at different stages of their life cycle. This study investigates the role of life cycle stages in the relationship between ESG and firm performance in the Chinese context. Using a sample of 26,412 firm–year observations of firms listed in China from 2011 to 2021, the results provide evidence that, although ESG has a significant positive effect on firm performance, the effect is contingent on the stages of the firm’s life cycle. The association between ESG and firm performance is more pronounced for firms in the growth and mature phases. We also find that this effect is enhanced for state-owned growth firms localized in regions with a lower marketization degree. Furthermore, the findings also extend the distinct mediation roles of institutional investors and the agency cost of free cash flow in the nexus of ESG and firm performance. This paper provides direct empirical evidence for a better understanding of firm’s behavior across different life cycle stages, as well as helps to achieve a win–win situation of firm performance and social value.