Relationship between Life Cycle Stages of the Firm and Implied Cost of Capital, Based on Dynamic Resource-based Theory

According to the life cycle theory, firms, like living organisms, pass through a series of predictable patterns of development, and recognition of firms’ life cycle stages has important implications for understanding firms’ financial performances. This study aimed to assess the question that whether...

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Autores principales:	Ghodratollah Talebnia (Ph.D), Nesa Heshmat
Formato:	article
Lenguaje:	FA
Publicado:	Shahid Bahonar University of Kerman 2017
Materias:	implied cost of capital dickinson’s life cycle deangelo’s life cycle dynamic resource-based theory Accounting. Bookkeeping HF5601-5689
Acceso en línea:	https://doaj.org/article/6d21c13e905e44ef92ce6721534ae7f7
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spelling	oai:doaj.org-article:6d21c13e905e44ef92ce6721534ae7f72021-11-04T19:52:57ZRelationship between Life Cycle Stages of the Firm and Implied Cost of Capital, Based on Dynamic Resource-based Theory2008-89142476-292X10.22103/jak.2017.1677https://doaj.org/article/6d21c13e905e44ef92ce6721534ae7f72017-08-01T00:00:00Zhttps://jak.uk.ac.ir/article_1677_fb71eb1ca895ea6623393fbc529ab508.pdfhttps://doaj.org/toc/2008-8914https://doaj.org/toc/2476-292XAccording to the life cycle theory, firms, like living organisms, pass through a series of predictable patterns of development, and recognition of firms’ life cycle stages has important implications for understanding firms’ financial performances. This study aimed to assess the question that whether capital cost varies over the life cycle of firm, or not. In other words, how much capital costs could be affected by life cycle stages? Using a sample of 124 firms between 2007 and 2015, we observed variation of cost of equity capital over the life cycle of firms. In this study, firms’ life cycle were measured by Dickinson’s (2011) and DeAngelo (2006) models, and the same as earlier studies, cost of equity were estimated by the implied approaches, in particular, Easton (2004) and Ohlson and Juettner-Nauroth (2005) models. Findings showed that cost of equity is higher in beginning and in decline stages, and lower in growth and in mature stages. When DeAngelo (2006) life cycle measure (the ratio of retained earnings to total assets) was used, the findings indicated that cost of equity decreases as the ratio measure increases.Ghodratollah Talebnia (Ph.D)Nesa HeshmatShahid Bahonar University of Kermanarticleimplied cost of capitaldickinson’s life cycledeangelo’s life cycledynamic resource-based theoryAccounting. BookkeepingHF5601-5689FAمجله دانش حسابداری, Vol 8, Iss 2, Pp 105-131 (2017)
institution	DOAJ
collection	DOAJ
language	FA
topic	implied cost of capital dickinson’s life cycle deangelo’s life cycle dynamic resource-based theory Accounting. Bookkeeping HF5601-5689
spellingShingle	implied cost of capital dickinson’s life cycle deangelo’s life cycle dynamic resource-based theory Accounting. Bookkeeping HF5601-5689 Ghodratollah Talebnia (Ph.D) Nesa Heshmat Relationship between Life Cycle Stages of the Firm and Implied Cost of Capital, Based on Dynamic Resource-based Theory
description	According to the life cycle theory, firms, like living organisms, pass through a series of predictable patterns of development, and recognition of firms’ life cycle stages has important implications for understanding firms’ financial performances. This study aimed to assess the question that whether capital cost varies over the life cycle of firm, or not. In other words, how much capital costs could be affected by life cycle stages? Using a sample of 124 firms between 2007 and 2015, we observed variation of cost of equity capital over the life cycle of firms. In this study, firms’ life cycle were measured by Dickinson’s (2011) and DeAngelo (2006) models, and the same as earlier studies, cost of equity were estimated by the implied approaches, in particular, Easton (2004) and Ohlson and Juettner-Nauroth (2005) models. Findings showed that cost of equity is higher in beginning and in decline stages, and lower in growth and in mature stages. When DeAngelo (2006) life cycle measure (the ratio of retained earnings to total assets) was used, the findings indicated that cost of equity decreases as the ratio measure increases.
format	article
author	Ghodratollah Talebnia (Ph.D) Nesa Heshmat
author_facet	Ghodratollah Talebnia (Ph.D) Nesa Heshmat
author_sort	Ghodratollah Talebnia (Ph.D)
title	Relationship between Life Cycle Stages of the Firm and Implied Cost of Capital, Based on Dynamic Resource-based Theory
title_short	Relationship between Life Cycle Stages of the Firm and Implied Cost of Capital, Based on Dynamic Resource-based Theory
title_full	Relationship between Life Cycle Stages of the Firm and Implied Cost of Capital, Based on Dynamic Resource-based Theory
title_fullStr	Relationship between Life Cycle Stages of the Firm and Implied Cost of Capital, Based on Dynamic Resource-based Theory
title_full_unstemmed	Relationship between Life Cycle Stages of the Firm and Implied Cost of Capital, Based on Dynamic Resource-based Theory
title_sort	relationship between life cycle stages of the firm and implied cost of capital, based on dynamic resource-based theory
publisher	Shahid Bahonar University of Kerman
publishDate	2017
url	https://doaj.org/article/6d21c13e905e44ef92ce6721534ae7f7
work_keys_str_mv	AT ghodratollahtalebniaphd relationshipbetweenlifecyclestagesofthefirmandimpliedcostofcapitalbasedondynamicresourcebasedtheory AT nesaheshmat relationshipbetweenlifecyclestagesofthefirmandimpliedcostofcapitalbasedondynamicresourcebasedtheory
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Relationship between Life Cycle Stages of the Firm and Implied Cost of Capital, Based on Dynamic Resource-based Theory

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