Governance and the Corporate Life-Cycle

25 Pages Posted: 18 Dec 2013

See all articles by Thomas O’Connor

Thomas O’Connor

National University of Ireland, Maynooth (NUI Maynooth) - Department of Economics, Finance and Accounting

Julie Byrne

Dublin City University

Date Written: December 16, 2013

Abstract

Purpose – The purpose of this research is to examine whether corporate governance changes along the corporate life-cycle.

Design/methodology/approach – In a sample of 205 firms from 21 emerging market countries and using a life-cycle proxy from the dividends literature, we use a governance-prediction model which examines whether corporate governance differs along the corporate life-cycle.

Findings – Mature firms tend to practice better overall corporate governance. Discipline and independence improve as firms mature. Firms tend to be most transparent and accountable when they are young. These findings suggest that the resource/strategy and monitoring/control governance functions are relevant but at different life-cycle stages.

Research limitations/implications – In the absence of longitudinal governance data with sufficient coverage to track within-firm changes in corporate governance along the corporate life-cycle, we analyze differences in corporate governance between-firms at different life-cycle stages.

Originality/value – We use an alternative, yet new measure from the dividends literature to account for the firm’s position along the corporate life-cycle. With this new measure, our findings are in line with the predictions of Filatotchev et al. (2006).

Keywords: Corporate governance, corporate life-cycle, emerging markets.

JEL Classification: G34

Suggested Citation

O'Connor, Thomas and Byrne, Julie, Governance and the Corporate Life-Cycle (December 16, 2013). Available at SSRN: https://ssrn.com/abstract=2368562 or http://dx.doi.org/10.2139/ssrn.2368562

Thomas O'Connor (Contact Author)

National University of Ireland, Maynooth (NUI Maynooth) - Department of Economics, Finance and Accounting ( email )

County Kildare
Ireland

Julie Byrne

Dublin City University ( email )

Ireland 9
Dublin 9, leinster 9
Ireland

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