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Evaluation of the Effect of Company's Life Cycle on the Cost of Equity

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  • Mehdi Maranjory
  • Samira Keykha

Abstract

The aim of this study is to investigate effect of company's life cycle on cost of stockholders , in this regard, three hypotheses were developed that a sample of 118 companies during the period of 2009 to 2015 were selected in order test them and regression model and panel data was used to analyze hypotheses. In this study, Dickinson (DeAngelo et al., 2006; Dickinson, 2011; Rahmanian, Moghaddam et al., 2014) company life cycle criteria has been used to separate companies to different steps of company life cycle and the Gordon growth model has been used to measure cost of stockholders. The results show that the cost of stockholders has significant difference with each other in mature phase of Company life cycle Compared with recession of company's life cycle. The results also show that cost of stockholders have significant difference with each other compared with recession of company's life cycle in the growth stage of companies life cycle . Finally, the results show that cost of stockholders have significant difference with each other in the Company life cycle birth and decline compared with the record of company's life cycle.

Suggested Citation

  • Mehdi Maranjory & Samira Keykha, 2016. "Evaluation of the Effect of Company's Life Cycle on the Cost of Equity," Modern Applied Science, Canadian Center of Science and Education, vol. 10(12), pages 237-237, December.
    • Handle: RePEc:ibn:masjnl:v:10:y:2016:i:12:p:237
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    References listed on IDEAS

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    1. Yordying Thanatawee, 2011. "Life-Cycle Theory and Free Cash Flow Hypothesis: Evidence from Dividend Policy in Thailand," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 2(2), pages 52-60, July.
    2. Danny Miller & Peter H. Friesen, 1984. "A Longitudinal Study of the Corporate Life Cycle," Management Science, INFORMS, vol. 30(10), pages 1161-1183, October.
    3. Moores, Ken & Yuen, Susana, 2001. "Management accounting systems and organizational configuration: a life-cycle perspective," Accounting, Organizations and Society, Elsevier, vol. 26(4-5), pages 351-389.
    4. DeAngelo, Harry & DeAngelo, Linda & Stulz, Rene M., 2006. "Dividend policy and the earned/contributed capital mix: a test of the life-cycle theory," Journal of Financial Economics, Elsevier, vol. 81(2), pages 227-254, August.
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    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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