THE STAGES OF FIRM LIFE CYCLE AND CAPITAL STRUCTURE RATIOS FOR COMPANIES OF INDUSTRY

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Published:
Jun 10, 2020
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No. 23(72) (2020)
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Mirosław Wasilewski
Warsaw University of Life Science – SGGW
https://orcid.org/0000-0001-6791-5713
Joanna Żurakowska
Pope John Paul II State School of Higher Education in Biała Podlaska
https://orcid.org/0000-0002-3811-4586

DOI: https://doi.org/10.22630/PEFIM.2020.23.72.21
Keywords : industry companies, firm life cycle, capital structure
Abstract
This paper presents research on the dependency between the particular stages of a firm’s life cycle and selected capital structure ratios. The findings are in line with the pecking order theory of capital structure, stating that early stages of a firm’s life cycle should be characterised by the tendency for financing through debt. However, this stands in opposition to both the trade-off theory, and the research conducted on several Polish companies. The enterprises in their stages of introduction and growth were characterised by a substantially lower level of total assets to shareholders' equity ratio in their sources of finance, when compared to those in the shake-out stage. The companies in their growth stage were marked by a significantly higher level in the share of long-term commitments in sources of finance, as compared to the enterprises in their maturity, shake-out and decline stage. Also, the introduction stage showed a significantly higher level in the share of short-term commitments in sources of finance, in comparison with those being in their growth, maturity, and shake-out stage.

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How to Cite
Wasilewski, M., & Żurakowska, J. (2020). THE STAGES OF FIRM LIFE CYCLE AND CAPITAL STRUCTURE RATIOS FOR COMPANIES OF INDUSTRY . The Scientific Journal European Policies, Finance and Marketing, (23(72), 256–267. https://doi.org/10.22630/PEFIM.2020.23.72.21
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