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Do corporate policies follow a life-cycle?

Robert Faff, Wing Chun Kwok, Edward Podolski () and George Wong

Journal of Banking & Finance, 2016, vol. 69, issue C, 95-107

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.

Keywords: Life-cycle theory; Investment decisions; Financing decisions; Cash policy (search for similar items in EconPapers)
JEL-codes: G30 G31 G32 G35 (search for similar items in EconPapers)
Date: 2016
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DOI: 10.1016/j.jbankfin.2016.04.009

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Handle: RePEc:eee:jbfina:v:69:y:2016:i:c:p:95-107