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Corporate life cycle as determinant of capital structure in companies of Czech automotive industry

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  • Pavlína Pinková

    (Ústav podnikové ekonomiky, Mendelova univerzita v Brně, Zemědělská 1, 613 00 Brno, Česká republika)

  • Petra Kamínková

    (Ústav podnikové ekonomiky, Mendelova univerzita v Brně, Zemědělská 1, 613 00 Brno, Česká republika)

Abstract

The issue of capital structure choice belongs to fundamental strategic financial decisions. A variety of potential determinants was suggested by theoreticians; however, the corporate life cycle was considered of peripheral importance, and thus the relationship between corporate life stages and capital structure was investigated only exceptionally. Both concepts were in the meantime developed separately. Recently, it has appeared that the aforementioned relation has become a subject of increased interest of the researches as a way to better understanding of how the corporate funding is changing in the course of time. The main objective of this paper is to investigate the impact of corporate life cycle on the capital structure of companies. For the purpose of the article quantitative research is used. The sample consists of fifty companies belonging to NACE division 29, manufacture of motor vehicles, trailers and semi-trailers. The data come from financial statements of the chosen companies and mostly cover a period since their start-up till year 2010. First, the method based on cash flow patterns is applied for the identification of firm's life cycle. Next, the methods of descriptive statistics and the hypothesis test about a population proportion are used. The paper explores the relationship between capital structure and corporate life cycle. The empirical study is performed to support theoretical findings.

Suggested Citation

  • Pavlína Pinková & Petra Kamínková, 2012. "Corporate life cycle as determinant of capital structure in companies of Czech automotive industry," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 60(2), pages 255-260.
    • Handle: RePEc:mup:actaun:actaun_2012060020255
    DOI: 10.11118/actaun201260020255
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    References listed on IDEAS

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    1. Danny Miller & Peter H. Friesen, 1984. "A Longitudinal Study of the Corporate Life Cycle," Management Science, INFORMS, vol. 30(10), pages 1161-1183, October.
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    1. , Aisdl, 2019. "Developing a sustainable financing model for SMEs during the organizational life cycle in Uganda," OSF Preprints 2s8k9, Center for Open Science.

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