Life Cycle Stages Effects on Profitability and Growth of Enterprise Companies

Authors

Abstract

Business enterprises follow the life curve like other live organisms. Economic theories denote that firms can even be born, grow, and after a while die. According to the evidence, it is obvious that operational profit with its components (such as margin of operational profit and assets turnover) show a non-linear behavior during various stages of companies' life cycle. In this paper we consider to show that how this economic variable affects the growth and profitability of listed companies on Tehran Stock Exchange (TSE), using yearly data from 2000 until 2010.The test sample was 149 firms that has been listed on TSE before 2000.
To examine the research hypotheses we used survey based analysis and multi regression models, applying panel data and Wilcoxon rank sum test. Based on our findings hypotheses have not been rejected and confirm the efficiency of life cycle in financial analyses. However, the models have had a 40% enhancement in the ability of estimating, by calculating the life cycle variable into profitability predictor models

Keywords

References

- ثقفی، علی. (1373). «رفتار سود حسابداری». بررسی‌های حسابداری و حسابرسی، دورة 9، صص5- 21.
- حقیقت، حمید، و آرش قربانی. (1386). «رابطة سود و جریان‌های نقدی با ارزش شرکت در مدل چرخة عمر». پیام مدیریت، شمارة 21 و 22، صص201- 219.
- دهدار، فرهاد. (1386). «طراحی و تبیین الگوهای برتر ارزش‌گذاری مبتنی بر عایدات حسابداری و جریان وجوه نقد در فرایند چرخة عمر شرکت». پایان‌نامه دکتری، دانشگاه تربیت مدرس.
- عمرانی، حامد و غلامرضا کرمی. (1389). «اثر چرخة عمر و محافظه‌کاری بر ارزش شرکت». بررسی‌های حسابداری و حسابرسی، دورة 17، ص 79–96.
5- نوروش، ایرج و همکاران. (1386). مروری جامع بر حسابداری مالی. تهران، نگاه دانش.
- Adizes, Ichak. (1989). Corporate life cycle: How and Why corporations Grow and Die and What Do about It. Englewood Cliffs.
- Aharony, Joseph, Haim Falk,. & Nir Yehuda. (2006). “Corporate Life Cycle and the Relative Value- Relevance of Cash Flow versus Accrual Financial Information”.Working paper.
- Anthony, Joseph H., & K. Ramesh. (1992). “Association Between Accounting Performance Measure and Stock Prices, A Test of the Life Cycle Hypothesis”. Journal of Accounting and Economics, Vol. 15, pp203-27.
- Bixia, Xu. (2007). “Life Cycle Effect on the Value Relevance of Common Risk Factors”. Review of Accounting and Finance, Vol. 6, No. 2, pp.162-175.
- Bulan, Laarni, & Zhipeng Yan. (2005). “The Pecking Order of Financing in the Firm’s Life Cycle”. PhD Dissertation, Brandeis University, International Business School.
- Dennis, Mueller, & Yun Lawrence. (1998). “Rate of Return Over the Firm's Lifecycle”. Journal of Industrial and Corporate Changs, Vol. 7, No. 2, pp.347-368.
- Dickinson, Victoria. (2006). “Future Profitability and Ggrowth, and the Roles of Firm Life Cycle and Barriers- to- Entry”. PhD Dissertation, University of Wisconsin– Madison.
- Jenkins, David S., & Gregory D. Kane. (2004). “The Impact of the Corporate Life Cycle on the Value- Relevance of Disaggregated Earnings Components”. Review of Accounting and Finance, Vol. 3, pp.5-20.
- Park, Yonpae., & Kung Chen: (2006). “The Effect of Accounting Conservatism and Life Cycle Stages On Firm Valuation”. Journal of Applied Business Research, Vol. 22, pp.75-92.
- Rajshree, Agarwal. & B. Audretsch David. (2000). Does Entry Size Matter? The Impact of the Life Cycle and Technology on Firm Survival. Dept. of Economics, University of Central Florida. Institute of Development Strategies, Indiana University.
Empirical Research in Accounting
Volume 1, Issue 2 - Serial Number 2
January 2011
Pages 49-66

Files

History

  • Receive Date: 29 July 2012
  • Revise Date: 30 January 2021
  • Accept Date: 14 May 2013

Share

How to cite

Statistics