Intra-Life Cycle Information Transfers

58 Pages Posted: 16 Aug 2019

See all articles by Patrick Vorst

Patrick Vorst

Maastricht University School of Business and Economics

Teri Lombardi Yohn

Emory University Goizueta Business School

Date Written: August 1, 2019


We investigate the presence of a shared life cycle component in earnings and test whether the earnings of one firm are relevant for valuing other firms in the same life cycle stage. We find that firm-pairs in the same life cycle stage have greater accounting comparability and greater co-movement in their returns, operating performance, and investments than firm-pairs consisting of firms in different life cycle stages. We further document economically significant transfers of information from announcing firms to non-announcing life cycle peers around an announcing firm’s earnings announcement. The magnitudes are comparable to that of intra-industry information transfers and do not depend on whether the life cycle peers are also active in the same industry. In contrast, we find that intra-industry information transfers are smaller for industry peers in different life cycle stages. Information transfers are stronger for life cycle peers that have greater (transient) institutional cross-holdings, suggesting that institutional trading is an important mechanism by which life cycle information spills over. Overall, this study provides insight into the factors that shape a firm’s earnings generation process and investors’ use of such factors. Furthermore, this study complements prior literature on firm life cycle by providing additional evidence on the importance of life cycle in the valuation process.

Keywords: Life Cycle, Information Transfers, Spillovers

Suggested Citation

Vorst, Patrick and Yohn, Teri Lombardi, Intra-Life Cycle Information Transfers (August 1, 2019). Kelley School of Business Research Paper No. 19-47, Available at SSRN: or

Patrick Vorst (Contact Author)

Maastricht University School of Business and Economics ( email )

P.O. Box 616
Maastricht, 6200MD

Teri Lombardi Yohn

Emory University Goizueta Business School ( email )

201 Dowman Drive
Atlanta, GA 30322
United States

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