Firm's life cycle and cash flow classification: evidence from Indian firms

Kalyani Mulchandani, Ketan Mulchandani and Megha Jain

Asian Review of Accounting, 2023, vol. 32, issue 3, 443-462

Abstract: Purpose - The study examines the influence of a firm's life cycle on the cash flow classification of Indian firms. Design/methodology/approach - The study employs Dickinson's (2011) cash flow patterns to classify firm years under various life-cycle stages. Cash flow classification is employed to measure a firm's classification shifting (CS) practices. The study includes Indian firms listed on the Bombay Stock Exchange during 2012–2020, an ordinary least squares regression model, a fixed-effect model and a panel corrected with standard error regression method. Findings - Firms face different opportunities and challenges at different stages of the firm's life cycle and therefore adopt cash flow CS. The results show that firms adopt cash flow CS during introduction, growth and decline stage of life cycle either to boost or to reduce operating cash flows. Originality/value - This study is one of its kind to study the influence of a firm's life cycle on the cash flow classification of Indian firms.

Keywords: Cash flow from operations; Life cycle; Cash flow classification; Cash flow from financing; Cash flow from investing (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eme:arapps:ara-08-2023-0213

DOI: 10.1108/ARA-08-2023-0213

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