Search results

The purpose of this paper is to examine whether corporate governance changes along the corporate life-cycle.

In a sample of 205 firms from 21 emerging market countries and using a life-cycle proxy from the dividends literature, the authors use a governance-prediction model which examines whether corporate governance differs along the corporate life-cycle.

Mature firms tend to practice better overall corporate governance. Discipline and independence improve as firms mature. Firms tend to be most transparent and accountable when they are young. These findings suggest that the resource/strategy and monitoring/control governance functions are relevant but at different life-cycle stages.

In the absence of longitudinal governance data with sufficient coverage to track within-firm changes in corporate governance along the corporate life-cycle, the authors analyze differences in corporate governance between-firms at different life-cycle stages.

The authors use an alternative, yet new measure from the dividends literature to account for the firm’s position along the corporate life-cycle. With this new measure, the findings are in line with the predictions of Filatotchev et al. (2006).

This paper aims to examine the association between corporate social responsibility (CSR) and corporate life cycle as well as dividend policy in Indonesia.

The paper develops two hypotheses that are tested empirically through multivariate settings. The tests are conducted using a sample of 527 Indonesian listed firms and 923 Indonesian firm-year observations between 2008 and 2015.

The findings support the hypothesis that CSR expenses increase when firms enter the maturity stage of their life cycle. On the triple bottom line components of CSR, firms which invest on CSR economic are in their maturity stage of their life cycle. The evidence also suggests that firms’ social donation and charitable giving increase as firms become mature. Furthermore, the strong evidence supports the hypothesis that firms’ CSR expenses positively affect dividend policy. This finding is robust to the alternative measurement of dividend payout, additional firms’ characteristics and instrumental variable to address endogeneity.

For investors in Indonesian listed firms, it is more profitable to invest in socially responsible firms than socially irresponsible firms. For firms, the results imply that spending in CSR does not reduce performance, thus becoming attractive for investors.

To the best of the authors’ knowledge, there is thin literature investigating the relation between corporate life cycle, CSR, and dividend policy in emerging markets while it is important as it could encourage companies to integrate CSR into their business strategy and transparently disclose their CSR activities. Further, as previous research on these topics mainly conducted using the US data (Rakotomavo, 2012; Benlemlih, 2014; Hasan and Habib, 2017), which most of CSR disclosures are voluntary, this paper contributes to the existing literature by examining these topics in a country where CSR is mandatory by the law.

This study aims to explore corporate governance (CG) practices that can lead to firms’ better performance in different organizational life cycles. The authors propose a configurational approach to explore how a set of CG practices combine in bundles to achieve high performance outcomes for firms across their corporate life cycles.

Fuzzy-set qualitative comparative analysis was used to analyze a sample of data of 21 countries and 9 industries. Data referred to the period of 9 years extending from the year 2005 to the year 2013.

This study reveals that there are multiple CG practices that exist through firms that can achieve high firm performance. Moreover, CG practices combine in different ways for firms in their growth, maturity and declining stages.

This study demonstrates the value of using a configurational analytical approach to explore both the firm and country-specific CG practices (together) that engage firms to achieve the desired level of performance across the corporate life cycles.

The current study draws attention to the policymakers’ need to assess the current level of regulatory and competitive development of their countries and form policy accordingly. The approach used in the current research study not only offers the linkages between CG and performance to managers as incentives to comply with regulation but also to view CG-related activity as a strategic move.

The approach used in the current research study not only offers the linkages between CG and performance to managers as incentives to comply with regulation but also to view CG-related activity as a strategic move.

This study broadening the focus of CG studies to include a rigorous explanation of the global CG phenomena and to provide effective solutions for the practitioners.

This study demonstrates the value of using a configurational analytical approach to explore both the firm and country-specific CG practices (together) that engage firms to achieve the desired level of performance across the corporate life cycles.

The purpose of this paper is to investigate how corporate cash holdings changes across firm life cycle and how firms undergo heterogeneous dynamic cash adjustment as they advance from one stage to the next stage.

This study uses an extensive data set of 2,994 Chinese A-listed firms. The authors use generalized method of moments (GMM) and Fisher Panel unit root testing to investigate the targeting behavior of Chinese firms.

The uni-variate investigation reveals that firms in the growth stage exhibits the highest cash levels and firms in the decline stage report the lowest cash levels. As growth firms have high investment needs, they may require raising external capital to meet investment needs. To avoid the costly external financing, firms in growth stage tend to hold more cash. The GMM estimation reveals that along all the phases of firm life cycle there are evidences of trade-off behavior of corporate cash holdings. The authors report that adjustment rate increases as firms enters into the growth stage.

The findings provide both theoretical and practical insight to align cash policies with the available strategic choices along firm life cycle in an emerging market characterized by market imperfections.

The study is unique from the context that it is applying robust methodology to one of rarely investigated area in corporate cash policy. The peculiar Chinese study setting characterized by higher information asymmetry, high cost of external financing and heterogeneous access to financing sources provide theoretical and empirical underpinnings to investigate and gain insight about how corporate cash policy can be aligned with strategic choices available across different stages of life cycle.

The purpose of this paper is to assess US-based firms from 2005 to 2015 to determine whether firms with better corporate social responsibility (CSR) performance will allocate capital through their life-cycle to better maintain or extend total assets.

Kinder, Lydenberg, Domini Research & Analytics social performance rating scores were used to measure CSR performance in an initial sample of 19,707 firm-year observations. Firms are first classified into stages including introduction, growth, maturity, and decline, and use multiclass linear discriminant analysis, the Dickinson classification scheme (Dickinson, 2011), and the ratio of retained earnings to total assets (RETA) as life-cycle proxies. Life-cycle was formulated based on a broad set of accounting data sourced from Compustat. Various corporate characteristics from the CRSP database were used to classify all sample firms into five equal groups based on their CSR performance.

A firm’s equity and debt issuance assume a hump shape over the life-cycle under CSR practice, and higher-CSR firms face fewer significant issues as they mature; payout, RETA, and free cash flow decreased from high-CSR performance firms to low-CSR performance firms; and cash holdings also exhibit a hump shape over the life-cycle and higher-CSR practices are associated with significantly lower cash holdings.

CSR performance is a useful predictor for forecasting firm life-cycle and superior CSR performance ensures efficient capital allocation throughout firm life-cycle. Furthermore, CSR practice is an indicator of firm life-cycle sustainability and indicates a firm’s future cash flow patterns.

The paper seeks to present a novel conceptual framework that integrates the strategic dynamics of the firm with changes in its governance systems.

The agency research agenda is extended to include other corporate governance roles, such as resource and strategy functions, alongside monitoring and control functions. Theoretical arguments are supported by empirical data related to the founder‐manager/IPO, IPO/maturity, maturity/decline and reinvention thresholds.

The paper shows that corporate governance parameters may be linked to strategic thresholds in the firm's life‐cycle. Successful transition over a threshold is accompanied by a rebalancing in the structure and roles of corporate governance compared with each previous stage in the cycle.

In the absence of longitudinal data relating to firms as they pass through all life‐cycle stages the study has been restricted to reporting illustrative data from different studies regarding each strategic threshold. Further research might usefully undertake detailed long‐term case studies using a combination of archival and interview data to trace the evolution of firms across the four thresholds.

This paper develops a novel conceptual framework that integrates the strategic dynamics of the firm with changes in its governance systems. It rejects the notion of a universal governance template and argues that corporate governance parameters may be linked to transitions from one stage to another in the firm's life‐cycle. Accordingly, it argues that changes in a firm's strategic positioning may be associated with rebalancing between the wealth‐protection and wealth‐creation functions of governance.

Drawing 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.

Collecting 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.

The 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.

The 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.

This 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.

The purpose of this paper is to explore the relationship between corporate governance and firm value at different stages of the corporate life-cycle.

The authors use two measures, commonly employed in the literature, to differentiate between “immature” and “mature” firms, and estimate separate governance-value regressions for each set of firms.

The findings suggest that it is differences in the resource/strategic governance functions, which manifest in young firms which result in differences in value across firms, all else equal. The authors find no relationship between governance and firm value for older firms. Hence, differences in the monitoring aspect of governance between mature firms are not rewarded with a value premium.

The findings imply that the strategic and resource roles of governance are “must haves” for firms since firms that score highly on these fronts are valued more highly. In contrast, differences in the monitoring aspect of governance are not rewarded, suggesting that effective monitoring is not a necessity, but rather a “nice to have”. The analysis is limited to a small sample of emerging market firms, and it would be of interest to extend this analysis to a larger and broader sample of firms.

The findings suggest that corporate governance is not valued at all stages of the corporate life-cycle.

This study aims to examine the role of the board of directors in affecting earnings management practices across small- and medium-sized enterprises (SMEs) life cycle.

Data is collected from 280 SMEs listed on the London Stock Exchange during the period of 2009–2016. Fixed effects regression analysis is used to test the hypotheses.

This study shows that the impact of the board of directors' roles on earnings management practices varies depending on the SMEs life cycle stage. In the introduction, growth and decline stages of SMEs, the wealth creation role of the board is negatively significant with earnings management, while the wealth protection role of the board is positively significant in the growth and maturity phases. Results suggest that the board's responsibility to create wealth deters early-stage earnings management strategies, while protecting shareholder interests, in latter stages, leads to a decrease in earnings management.

The findings suggest that corporate governance should be customized to the specific stage of the SMEs life cycle. Additionally, different life cycle stages may impose different requirements on corporate boards to shape the effectiveness of these mechanisms and constrain earnings management practices.

To the best of the authors’ knowledge, this study offers one of the first insights on the UK SMEs to understand how board functions and earnings management practices vary over SMEs life cycles. It will offer important information on the effect of board features on earnings management in SMEs in the UK and is anticipated to be of importance to policymakers, regulators, investors and practitioners.

This study empirically investigates the role of product market competition and mature-stage firm life cycle on the relation between corporate social responsibility (CSR) and market performance in an emerging market context – Malaysia.

The authors construct a comprehensive CSR index toward the economy, environment and society (EES) and apply both Ordinary Least Squares (OLS) and Two-Stage Least Squares (2SLS) instrumental variables (IV) approaches to test the hypotheses of the study.

The authors find that EES-based CSR generally enhances firms' market performance; however, the level of product market competition undermines the market performance of socially and economically responsible firms. In addition, the study results indicate that mature-stage firm life cycle with more involvement in CSR activities shows better market performance. However, the endogeneity check of CSR suggests that both CSR and mature-stage firms are mutually exclusive in influencing market performance. The study findings are robust to alternative measures and different identifications of high and low default risk situations of sample firms.

This study carries practical policy implications for the listed firms, regulators and stakeholders in general. For example, regulatory bodies may promote greater involvement in CSR activities by listed companies in the Malaysian stock market. Investors and other market participants should be aware of factors influencing socially responsible firms' market performance such as the corporate life cycle and the level of competition in product markets.

This research work responds to the call of regulatory bodies in Malaysia at a time when the Malaysian economy is under threat of environmental distraction practices by the palm oil industry and import ban by the largest export market, i.e. the European Union by 2030. The study also contributes to the theoretical literature by refining the moderating role of product market competition and mature-stage life cycle on the relationship between CSR and market performance from the perspectives of resource-based and stakeholder theories in emerging economy settings.