Governance and the corporate life-cycle

O’Connor, Thomas; Byrne, Julie

doi:10.1108/ijmf-03-2013-0033

Cited by 50 publications

(36 citation statements)

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“…They also don't have urgent needs in this phase as their main goal is to hold on their position in the market by maximizing firms' internal operation. [34] concludes that best corporate governance can be found in the mature stage of FLC. This again explains why firms don't get involved in aggressive tax planning in this stage.…”

Section: Advances In Economics Business and Management Research Volmentioning

confidence: 96%

The Firm Life Cycle Dynamics of Tax Avoidance

Mangoting¹,

Onggara²

2019

Proceedings of the International Conference on Tourism, Economics, Accounting, Management, and Social Science (TEAMS 2018)

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This paper aimed at finding out whether tax avoidance differed across firm life cycle (FLC). We used cash flows pattern as a proxy to identify FLC into 4 phases, namely introduction, growth, mature, and decline. Tax avoidance was measured using effective tax rate (ETR) to show the impact of this practice on net income. Each FLC phase had different characteristics and hence explained its dynamics to implement tax avoidance in every stage. As a part of firms' important strategy, tax avoidance decision would consider resource allocation across FLC phases. We constructed a dataset of Indonesia publicly listed manufacturing firms which were classified as basic industries and chemicals sectors. We used a final sample of 56 companies with an 8-year research period and found that tax avoidance practice varied along FLC phases. Based on the 448 firm-year observations, this study found that firms significantly positively engaged with tax avoidance in introduction and decline stages while significantly negatively engaged in growth and mature stages. These results indicate the extent of FLC phases in explaining firms' tendency to be involved in tax avoidance and thus useful for predicting current and future potential tax.

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Section: Advances In Economics Business and Management Research Volmentioning

confidence: 96%

The Firm Life Cycle Dynamics of Tax Avoidance

Mangoting¹,

Onggara²

2019

Proceedings of the International Conference on Tourism, Economics, Accounting, Management, and Social Science (TEAMS 2018)

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“…Previous studies have shown it is the monitoring role as opposed to the strategic and resource roles of governance that is most relevant for mature firms (see Filatotchev et al, 2006;O'Connor and Byrne, 2015). Our findings suggest that it is the strategic and resource functions of corporate governance, which is the most prominent role of governance in immature firms, which matters most for firm value.…”

Section: Resultsmentioning

confidence: 53%

“…Recent work also suggests that firms alter their governance needs across their life-cycle (see Filatotchev et al, 2006;O'Connor and Byrne, 2015). Governance attributes change and serves different functions as firms evolve.…”

Section: Resultsmentioning

confidence: 99%

“…In the most recent governance-prediction literature, the emphasis has shifted towards an examination of the dynamic nature of the principal-agent relationship by exploring Corporate governance how corporate governance quality changes within-firms over the corporate life-cycle (see Filatotchev et al, 2006;O'Connor and Byrne, 2015). While neither study can draw on longitudinal governance data in order to track governance changes within-firms, their analysis suggests that firms voluntarily alter their governance practices over their lifetime.…”

Section: Introductionmentioning

confidence: 99%

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When does corporate governance matter? Evidence from across the corporate life-cycle

O’Connor

Byrne

2015

Managerial Finance

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Purpose -The purpose of this paper is to explore the relationship between corporate governance and firm value at different stages of the corporate life-cycle. Design/methodology/approach -The authors use two measures, commonly employed in the literature, to differentiate between "immature" and "mature" firms, and estimate separate governance-value regressions for each set of firms. Findings -The findings suggest that it is differences in the resource/strategic governance functions, which manifest in young firms which result in differences in value across firms, all else equal. The authors find no relationship between governance and firm value for older firms. Hence, differences in the monitoring aspect of governance between mature firms are not rewarded with a value premium.Research limitations/implications -The findings imply that the strategic and resource roles of governance are "must haves" for firms since firms that score highly on these fronts are valued more highly. In contrast, differences in the monitoring aspect of governance are not rewarded, suggesting that effective monitoring is not a necessity, but rather a "nice to have". The analysis is limited to a small sample of emerging market firms, and it would be of interest to extend this analysis to a larger and broader sample of firms. Originality/value -The findings suggest that corporate governance is not valued at all stages of the corporate life-cycle.

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“…Less attention has been given to the effect of corporate governance and its relation to each elements of the product lifecycle (Filatotchev et al 2006;O'Connor & Byrne 2015). The corporate governance literature in the domain of governance to value has demonstrated a causal relation between corporate governance and the firm's value and risk.…”

Section: Prior Studies and Hypothesis Development Firm's Product Lifementioning

confidence: 99%