Firm life cycle and advisory directors

Ahsan Habib, Md. Borhan Uddin Bhuiyan and Mostafa Monzur Hasan
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Md. Borhan Uddin Bhuiyan: School of Accountancy, Massey University, Auckland, New Zealand

Australian Journal of Management, 2018, vol. 43, issue 4, 575-592

Abstract: This article investigates whether the presence of advisory directors and monitoring directors varies across firm life cycle stages. We follow a parsimonious life cycle proxy based on the predicted behaviour of operating, investing and financing cash flows across the different life cycle stages that result from firm performance and the allocation of resources. Using an Australian sample, this study shows that compared to mature-stage firms, firms in the introduction, shake-out and decline stages have more advisory directors. With respect to the demand for monitoring directors, we find that compared to mature-stage firms, firms in the introduction, shake-out and decline stages have fewer monitoring directors on the board. We contribute to the literature on boards of directors by documenting that firms choose an optimal board structure based on their economic characteristics. JEL Classification: D22, G38, M14

Keywords: Advisory directors; Australia; firm life cycle; monitoring directors (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:sae:ausman:v:43:y:2018:i:4:p:575-592

DOI: 10.1177/0312896217731502

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