The Association Between Cash Flow and Leverage for Firm Life Cycle
Abstract
The study examines the effect of cash flow and leverage in firm life cycle as the cash flow from operating, investing, and financing are different in each stage. The method used in this study is purposive sampling in which 101 manufacturing firms are selected as the sample. The unit of analysis is 606 observations. Chi-square test is used to analyze the data. The finding indicates that cash flow from operation is not significant based on firm life cycle, while cash flow from investment and financing as well as debt to equity ratio are found to be significant.
Keywords: cash flow, leverage, firm life cycle
References
[1] Black, E. L. (1998). Which is More Value-Relevant: Earnings or Cash Flows? Journal of Financial Statement Analysis, 4, 40–57. https://doi.org/10.2139/ssrn.118089
[2] Dickinson, V. (2011). Cash Flow Patterns as a Proxy for Firm Life Cycle. The Accounting Review, 86(6), 1969–1994. https://doi.org/10.2308/accr-10130
[3] Gumanti, T. A., & Puspitasari, N. (2008). Siklus Kehidupan Perusahaan dan Kaitannya dengan Investment Opportunity Set, Risiko dan Kinerja Finansial. Jurnal Riset Ekonomi Dan Bisnis, 8(1), 37–49.
[4] Hasan, M. M., Hossain, M., Cheung, A. W., & Habib, A. (2015). Corporate Life Cycle and Cost of Equity Capital. Journal of Contemporary Accounting & Economics. https: //doi.org/10.1016/j.jcae.2014.12.002
[5] James, B. G. (1973). The Theory of the Corporate Life Cycle. Long Range Planning, 68–74.
[6] James, B. G. (1974). The Theory of the Corporate Life Cycle. Long Range Planning, 49–55.
[7] Kighir, A. E., Omar, N. H., & Mohamed, N. (2015). Corporate Cash Flow and Dividends Smoothing: a Panel Data Analysis at Bursa Malaysia. Journal of Financial Reporting and Accounting, 13(1), 2–19. https://doi.org/10.1108/MBE-09-2016-0047
[8] Kousenidis, D. V. (2006). A free Cash Flow Version of the Cash Flow Statement: a note. Managerial Finance, 32(8), 645–653. https://doi.org/10.1108/ 03074350610676741
[9] Lightstone, K., Wilcox, K., & Beaubien, L. (2014). Misclassifying cash flows from operations: intentional or not? International Journal of Accounting & Information Management, 22(1), 18–32. https://doi.org/10.1108/IJAIM-07-2012-0039
[10] Qodriyah, R. D. L. (2012). Laba atau Arus Kas sebagai Parameter Kinerja Perusahaan Berdasarkan Siklus Hidup Perusahaan (Studi Relevansi Nilai). Jurnal Akuntansi Dan Ekonomi Bisnis, 1(1), 73–88.
[11] Ross, S. A., Westerfield, R. W., & Jaffe, J. (2005). Corporate Finance (7th ed). New York: McGraw-Hill