Do corporate policies follow a life-cycle?

Robert Faff; Wing Chun Kwok; Edward J. Podolski; George Wong

doi:10.1016/j.jbankfin.2016.04.009

Do corporate policies follow a life-cycle?

Robert Faff, Wing Chun Kwok, Edward J. Podolski^*, George Wong

^*Corresponding author for this work

Research output: Contribution to journal › Article › Research › peer-review

125 Citations (Scopus)

Abstract

We examine whether corporate investment, financing, and cash policies are interdependent and follow a predictable pattern in line with the firm life-cycle. We find that investments and equity issuance decrease with firm life-cycle, while debt issuance and cash holdings increase in the introduction and growth stages and decrease in the mature and shake-out/decline stages of the firm's life-cycle. These results are robust after using various proxies for life-cycle and controlling for firm, CEO and board level characteristics. Collectively, our results show that corporate policies follow a firm life-cycle.

Original language	English
Pages (from-to)	95-107
Number of pages	13
Journal	Journal of Banking and Finance
Volume	69
DOIs	https://doi.org/10.1016/j.jbankfin.2016.04.009
Publication status	Published - 1 Aug 2016
Externally published	Yes

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10.1016/j.jbankfin.2016.04.009

Cite this

@article{275d86c81f744ba3b705fb187a29cea9,

title = "Do corporate policies follow a life-cycle?",

abstract = "We examine whether corporate investment, financing, and cash policies are interdependent and follow a predictable pattern in line with the firm life-cycle. We find that investments and equity issuance decrease with firm life-cycle, while debt issuance and cash holdings increase in the introduction and growth stages and decrease in the mature and shake-out/decline stages of the firm's life-cycle. These results are robust after using various proxies for life-cycle and controlling for firm, CEO and board level characteristics. Collectively, our results show that corporate policies follow a firm life-cycle.",

author = "Robert Faff and Kwok, {Wing Chun} and Podolski, {Edward J.} and George Wong",

note = "Funding Information: We thank the editor (Geert Bekaert) and two anonymous referees for their invaluable comments which substantially improved the quality of the paper. Wong acknowledges financial support from RGC Fund and Central Research Grant provided by the Hong Kong Polytechnic University under Grant Nos. A-PJ98 and G-YN 61 , respectively. Publisher Copyright: {\textcopyright} 2016 Elsevier B.V. Copyright: Copyright 2016 Elsevier B.V., All rights reserved.",

year = "2016",

month = aug,

day = "1",

doi = "10.1016/j.jbankfin.2016.04.009",

language = "English",

volume = "69",

pages = "95--107",

journal = "Journal of Banking and Finance",