Stages of the Organizational Life Cycle and Systematic Risk
Evidence from Brazil
DOI:
https://doi.org/10.16930/2237-766220263569Keywords:
Organizational Life Cycle, Market Risk, Beta, CAPMAbstract
This study examines how systematic risk varies across the stages of the organizational life cycle of Brazilian publicly traded companies whose shares are listed on B3. Brasil Bolsa Balcão. To classify firms into different stages of the firm life cycle, the Dickinson model from 2011 was employed. Market risk, or systematic risk, represented by beta from the Capital Asset Pricing Model, was assessed using a sample of 276 companies, totaling 5.416 observations, covering the period from the first quarter of 2010 to the fourth quarter of 2022. comprising 52 quarters. Using linear regression models estimated by ordinary least squares, the results indicate that firms in the growth and maturity stages tend to exhibit lower market risk, while those in the introduction, turbulence, and decline stages show higher levels of risk. These findings suggest that the relationship between systematic risk and life cycle stages follows a U shaped pattern. The evidence is relevant as it allows investors and analysts to consider life cycle stages in firm valuation, while also providing managers with insights to assess the risks associated with each stage of the organizational life cycle.
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