The Role of Financial Distress on Company Life Cycle and Stock Return

Abstract

This study aims to see how the company life cycle affects stock returns with financial distress as a moderating variable in companies listed on the Indonesia Stock Exchange between 2017 and 2021. Purposive sampling was used to obtain a sample of 71 companies. A panel regression analysis with a fixed effect model was used for the analysis. The study's findings show that the decline stage of a company's life cycle hurts stock returns, whereas the introduction, growth, and maturity stages do not affect stock returns. Financial distress can mitigate the impact of the company's decline stage on stock returns. However, it needs to mitigate the impact of the company's introduction, growth, and maturity stages on stock returns.

The Effect of Cash Flow and CSR Moderated by Corporate Governance

“…This is because the cash flow owned by the company is unable to pay obligations / debts with a predetermined maturity, due to negative cash flow. When this goes on for a long time, it means that financial distress can end in bankruptcy (Akhmad Sigit Adiwibowo et al, 2023). Companies that have good corporate governance should have good financial and nonfinancial conditions, usually with ineffective and un-disciplined internal management of the company, even companies with better good corporate governance can experience financial distress.…”