Corporate Life Cycle Theory and Accounting Performance: Borsa Istanbul Case

This study examines the association between accounting performance measures and stock returns with the corporate life cycle theory. Corporate life cycle stages which are derived from the product life cycle are the results from changes in the strategic activities of the firms. We use Anthony and Rame...

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Bibliographic Details
Published in:Journal of Accounting & Finance / Muhasebe ve Finansman Dergisi 2018-04 (78)
Main Authors: Güleç, Ömer Faruk, Karacaer, Semra
Format: Article
Language:eng ; tur
Subjects:
Accounting
Business cycles
Capital expenditures
Financial performance
Product life cycle
Rates of return
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Summary:This study examines the association between accounting performance measures and stock returns with the corporate life cycle theory. Corporate life cycle stages which are derived from the product life cycle are the results from changes in the strategic activities of the firms. We use Anthony and Ramesh (1992) value relevance model to test whether the stock market responses to three accounting measures (sales growth, capital expenditures, and earnings) are the functions of life cycle concept. We choose 153 non financial firms that operate on Borsa Istanbul for the years between 2006 and 2014 for the analyses. According to the results, three accounting performance measures that are unexpected sales growth, unexpected capital expenditures, and unexpected earnings are most (least) highly valued in growth (decline) stage. In addition, while technology and communication industries at the growth stage, metal industry, cement and glass products industry are at the decline stage.
ISSN:1304-0391
2146-3042