Studying the Relationship between Company Life Cycle and Cost of Equity

• Published in: Kuwait chapter of Arabian journal of business & management review Vol. 6; no. 2; pp. 32 - 42
• Main Authors: Gilaninia , Shahram, Azadi , Keyhan, Karvan , Hossein
• Format: Journal Article
• Language: English
• Published: Kuwait - Kuwait American University 01.10.2016; Sohar University, Oman and American University of Kuwait
• Subjects: Capital markets; Capital structure; CORPORATIONS; Deficit financing; Dependent variables; Dividends; Economic models; Equity; Equity method; FINANCIAL MARKET; Hypotheses; Hypothesis testing; INDUSTRIAL MANAGEMENT; INVESTMENT RETURNS; Investments; IRAN; Rates of return; Securities markets; SHARES; Stock exchanges; Stockholders; Studies; Theory; Variables; إيران; الأسهم; الأسواق المالية; الإدارة الصناعية; الشركات; عائدات الإستثمار
• ISSN: 2224-8358; 2224-8358
• DOI: 10.12816/0031559

In the present study attempted to study relationship between life cycle of company and the cost of equity in capital market of Iran. In this study, three hypotheses are developed according to the assumptions and theoretical foundations of research and also the impact of the life cycle of the company on cost of equity is examined. It should be noted that the variables such as assets, stock market value, systematic risk, financial leverage and indicator of bankruptcy is considered as a control variable. Study period is 7-year (from 2007 to 2014) and listed companies in stock exchange of Tehran-Iran is considered as statistical population and statistical sample includes 100 companies and the number of observations is equal to 700 companies. The results of research show that there is negative relationship between the company's life cycle (growth period) and cost of equity. The results also show that there is positive relationship between company life cycle in maturity period and the cost of equity and there isn't significant relationship between the life cycle of the company in decline period and the cost of equity