Version 1
: Received: 18 January 2019 / Approved: 21 January 2019 / Online: 21 January 2019 (09:10:39 CET)
How to cite:
Akbar, A.; Akbar, M.; Tang, W.; Qureshi, M.A. Is Bankruptcy Risk Tied to Corporate Life-Cycle? Evidence from Pakistan. Preprints2019, 2019010201. https://doi.org/10.20944/preprints201901.0201.v1
Akbar, A.; Akbar, M.; Tang, W.; Qureshi, M.A. Is Bankruptcy Risk Tied to Corporate Life-Cycle? Evidence from Pakistan. Preprints 2019, 2019010201. https://doi.org/10.20944/preprints201901.0201.v1
Akbar, A.; Akbar, M.; Tang, W.; Qureshi, M.A. Is Bankruptcy Risk Tied to Corporate Life-Cycle? Evidence from Pakistan. Preprints2019, 2019010201. https://doi.org/10.20944/preprints201901.0201.v1
APA Style
Akbar, A., Akbar, M., Tang, W., & Qureshi, M.A. (2019). Is Bankruptcy Risk Tied to Corporate Life-Cycle? Evidence from Pakistan. Preprints. https://doi.org/10.20944/preprints201901.0201.v1
Chicago/Turabian Style
Akbar, A., Wenjin Tang and Muhammad Azeem Qureshi. 2019 "Is Bankruptcy Risk Tied to Corporate Life-Cycle? Evidence from Pakistan" Preprints. https://doi.org/10.20944/preprints201901.0201.v1
Abstract
In this paper we analyze the relationship between bankruptcy risk and the corporate life cycle in Pakistan from 2005 to 2014. For this purpose, we run a Hierarchical Linear Mixed Model (HLM) for a sample of 301 non-financial listed firms in 12 different sectors. The empirical outcomes reveal that firms during introduction, growth and, decline stages (mature stage) of life-cycle experience higher (lower) bankruptcy risk. Moreover, in juxtaposition with growth stage, bankruptcy risk is higher at the introduction stage of life-cycle. These findings suggest that financial managers should be cautious about the financial fragility of the firm at each stage of corporate life-cycle. The results also entail that Pakistani firms do not follow a sequential pattern in their life-cycle rather they have the tendency to revert to a previous stage or jump to the next stage of life-cycle. This is the first study that empirically examines the association between firm life-cycle stage and corresponding bankruptcy risk and asserts that managers must incorporate the life-cycle effects into their financial planning and decision making for sustainable working of an enterprise.
Copyright:
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
