Dynamics of financial leverage across firm life cycle in Chinese firms:An empirical investigation using dynamic panel data model

This study tries to investigate how firms adjust their leverage policy across the firm’s life cycle.For this purpose the study uses an extensive set of data of 867 A listed Chinese non-financial firms over a 19-year years period(1996-2014).The study employs Arellano-Bover/Blundell-Bond dynamic panel data model to estimate adjustment rate of leverage and its determinants in three different life stages of Chinese firms.We find that adjustment rate of leverage varies for different life stages.In accordance with trade off theory of capital structure this study reports a low-high-low pattern of leverage across growth,maturity and decline stage of firms’life respectively.For total leverage,dynamic panel data reports highest adjustment rate for growing firms,followed by mature firms and firms in declining stage of their life.Both short term and long term leverage report similar pattern of leverage’s adjustment rate across the three stages of life cycle.The study provides useful insight in a unique market setting of Chinese financial markets.

Entrepreneurial Orientation and Performance of Chinese High-Tech Firms： The Mediating Role of Organizational Learning and Moderating Role of Firm Life Cycle

The evidence about how entrepreneurial orientation （EO） affects firms＇ performance remains inconclusive. This study joins the research by incorporating organizational learning （OL） as a micro-macro link and by extending empirical work to the largely underexplored context of Chinese high-tech industries. Results from a survey of 252 Chinese high-tech firms demonstrate： （1） entrepreneurial orientation is positively related to firm performance; （2） organizational learning is also positively related to firm performance; （3） organizational learning partly mediates the positive impact of entrepreneurial orientation on firm performance; and （4） high-tech companies in the start-up and growth stage are likely to demonstrate stronger linkages in the EO-OL-performance relationship than in mature stage, which shows that the EO-OL-performance relationship is moderated by firms＇ life cycle.

Debt Rating Initiations： Natural Evolution or Opportunistic Behavior？

The authors examine a firm＇s decision to begin issuing debt in public bond markets and find that it is a function of both life cycle influences and opportunistic timing. Defining life cycle factors to encompass both a firm＇s age in years and its underlying characteristics, the authors confirm that bond market participation is generally restricted to large, mature firms. Summary statistics show that finns obtain their initial bond ratings on average 9.5 years after their equity initial public offering （IPO） and 11.8 years after initiating dividend payments. Growth rates, capital expenditures, and cash flow volatility all decline as the firm accesses public debt markets, consistent with entry into the mature phase of its life cycle. With respect to opportunistic timing, it is asked whether entry into public bond markets follows strong performance （or precedes weak performance） at both the firm and market levels. At the firm level, the authors find that the debt IPO occurs following periods of strong operating performance and high excess stock returns. At the market level, entry coincides with favorable interest rates and default spreads. The benefits of careful timing result in firms receiving initial bond ratings that are stronger than what would be predicted; however, there is no evidence of abnormal numbers of downgrades for these firms in subsequent years.