Stages of firm life cycle, transition, and dividend policy

Bhattacharya, Debarati; Chang, Chia‐Lun; Li, Wei Hsien

doi:10.1016/j.frl.2019.06.024

Cited by 35 publications

(26 citation statements)

References 16 publications

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“…The results support those of previous pioneering researchers, notably French (2001), DeAngelo et al (2006) and Coulton and Ruddock (2011) and other studies, namely Flavin and O'Connor (2017) and Bhattacharya et al (2019).…”

Section: Regression Analysissupporting

confidence: 92%

“…In relatively similar study, Bhattacharya et al (2019) documented that mature companies are likely to pay dividends. They then observe and document that life cycle changes have a significant impact on companies' payout decisions.…”

Section: Aimmentioning

confidence: 97%

“…Furthermore, Fama and French (2001), Grullon, Michaely and Swaminathan (2002), Grullon et al (2005) and DeAngelo, DeAngelo and Stulz (2006) noticed a high fraction of companies that pay dividends when retained earnings constitute a significant portion of total earnings or total assets. Flavin and O'Connor (2017) and Bhattacharya, Chang and Li (2019) examined the relationship between payout policy and life-cycle hypothesis and found that dividends payouts increase with life cycle stages until peaking at maturity. Accordingly, the objective of this study is to test the dividend life-cycle hypothesis in the South African setting being the emerging economy, that is, to test prevalence of the hypothesis.…”

Section: Aimmentioning

confidence: 99%

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Corporate life cycle and dividend payout: A panel data analysis of companies in an emerging market

Munzhelele

Wolmarans

Hall

2021

Journal of Economic and Financial Sciences

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Background: The dividend payout policy remains one of the key functional areas of corporate finance because it is through receipt of dividends that shareholders can share in the profits of their investments. Amongst the dividend payout theories that have been developed over the decades, the life-cycle hypothesis has received little attention in research.Aim: The aim of this study was to test the dividend life-cycle hypothesis in the South African contex.Motivation for the study: Justification for this study in the context of South Africa is that there is minimal research in this regard in emerging economies. South Africa presents a good platform for this research because it is amongst the highly regarded emerging markets and this has been confirmed by its representation in Brazil, Russia, India, China and South Africa (BRICS) countries. Hence, results in this regard would shed some light in the form of a relative representation of overall emerging markets trend.Research approach/design and method: A panel data of 119 Johannesburg Stock Exchange (JSE) listed sample companies were used to test the hypothesis during the period 2006–2015. A combination of basic and dynamic panel data estimators was used to analyse the data.Main findings: The study finds that the dividend life-cycle hypothesis is prevalent amongst South African companies. Specifically, it was observed that the considered companies pursuing growth projects paid less dividends. Furthermore, the growth companies have shown to be more aggressive in their pursuit for growth and hence are able to create more value for shareholders than value for companies.Managerial implications: Financial managers will be afforded with enhanced decision alternatives in respect of their fiduciary duties towards the shareholders in respect of maximising value.Conclusion: These results provide a mirror image of those of the developed markets and a good context for future research in the same area in an emerging economy setting.

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Section: Regression Analysissupporting

confidence: 92%

Section: Aimmentioning

confidence: 97%

Section: Aimmentioning

confidence: 99%

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Corporate life cycle and dividend payout: A panel data analysis of companies in an emerging market

Munzhelele

Wolmarans

Hall

2021

Journal of Economic and Financial Sciences

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“…The results of this study confirm previous studies undertaken by [3], [4], [12], [6], [5], [13], [7] which state that life cycle theory has a positive and significant effect on dividend policy.…”

Section: Discussionsupporting

confidence: 91%

“…The results of his research are in line with [5] in Egypt, which, based on this research, provides evidence for the presence of a life cycle theory against dividends in Egypt. [6] analyzed the presence of evidence of the ability of cash flow-based life cycle proxies, established by [7], to explain the tendency of companies to pay dividends, that can be substantially increased.…”

Section: Introductionmentioning

confidence: 99%

The Effect of Life Cycle on Dividend Policies of Manufacturing Companies Listed in Indonesia Stock Exchange

Aryani¹,

Patrisia²

2021

Proceedings of the Sixth Padang International Conference on Economics Education, Economics, Business and Management, Accounting

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The purpose of this study is to assess the impact of the effect of life cycle on dividend policy of the Indonesian Stock Exchange. The population of this study are all manufacturing companies listed in Indonesia Stock Exchange during period 2014 to 2018 uses secondary data. The sampling method used is purposive sampling. The number of samples used in this analysis are 305 samples (61 companies with 5 years of research). The data analysis technique used is a multiple linear regression analysis with using SPSS 16 program. The results showed that the life-cycle variable had a positive and significant effect on dividend policy as calculated by the use of Retained Earnings to Total Equity (RE/TE), both using control variables or without using control variables.

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The interplay of cash flow uncertainty and firm life cycle on sustainability disclosure

Shiljas,

Kumar

2024

Bus Strat Env

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This study investigates the role of cash flow uncertainty and firm life cycle on sustainability disclosures using environmental, social and governance (ESG) disclosure score data. We conduct our analysis on a sample of 190 Indian firms for a period of 12 years from 2010 to 2021. Drawing upon the real‐option theory and organisational‐inertia theory, we document a negative impact of cash flow uncertainty and firm life cycle on a firm's commitment to disclose sustainability information. We also find a significant impact of managerial risk inclination and risk tolerance at the firm level in moderating the above relationships. Our findings can help managers equip themselves to meet the challenges of sustainability commitments during cash flow constraints and firm life‐cycle transitions. Moreover, our results can also help policymakers in assessing the need to enforce sustainability disclosures depending on the hurdles confronted by a firm.

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Stages of firm life cycle, transition, and dividend policy

Cited by 35 publications

References 16 publications

Corporate life cycle and dividend payout: A panel data analysis of companies in an emerging market

Corporate life cycle and dividend payout: A panel data analysis of companies in an emerging market

The Effect of Life Cycle on Dividend Policies of Manufacturing Companies Listed in Indonesia Stock Exchange

The interplay of cash flow uncertainty and firm life cycle on sustainability disclosure

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