Does maturity signals high risk and high return?

Novi Swandari Budiarso, Winston Pontoh

Abstract


The objective of this study is to examine the interaction between firm maturity and firm growth opportunities over risk and its impact on returns. This study uses 135 firms listed in Indonesia Stock Exchange during 2010 to 2016 as sample which gives 945 as total observed data. This study conducts path analysis in term for hypothesis testing and finds that firm maturity has significant role to increase the risk which gives impact on increasing the returns. In context of Indonesian firms, the findings imply that mature firms will have higher risk and higher returns.


Keywords


signaling; maturity; risk; return; Indonesia

Full Text:

PDF

References


Asquith, P., & Mullins, D. W. (1986). Signalling with dividends, stock repurchases, and equity issues. Financial Management, 15(3), 27-44. http://www.jstor.org/stable/3664842

Ben-Horim, M., & Levy, H. (1980). Total risk, diversifiable risk and nondiversifiable risk: A pedagogic note. The Journal of Financial and Quantitative Analysis, 15(2), 289-297. https://doi.org/10.2307/2330346

Bernardo, A. E., Chowdhry, B., & Goyal, A. (2007). Growth options, beta, and the cost of capital. Financial Management, 36(2), 1-13. https://doi.org/10.1111/j.1755-053X.2007.tb00084.x

Bollerslev, T., & Zhang, B. Y. B. (2003). Measuring and modeling systematic risk in factor pricing models using high-frequency data. Journal of Empirical Finance, 10, 533-558. https://doi.org/10.1016/S0927-5398(03)00004-5

Budiarso, N. S., Subroto, B., T, Sutrisno., & Pontoh, W. (2019). Dividend catering, life-cycle, and policy: Evidence from Indonesia. Cogent Economics & Finance, 7(1). https://doi.org/10.1080/23322039.2019.1594505

Connelly, B. L., Certo, S. T., Ireland, R. D., & Reutzel, C. R. (2011). Signaling theory: A review and assessment. Journal of Management, 37(1), 39–67. https://doi.org/10.1177/0149206310388419

DeAngelo, H., DeAngelo, L., & Stulz, R. M. (2006). Dividend policy and the earned/contributed capital mix: a test of the life-cycle theory. Journal of Financial Economics, 81(2), 227–254. https://doi.org/10.1016/j.jfineco.2005.07.005

Easterbrook, F. H. (1984). Two agency-cost explanations of dividends. The American Economic Review, 74(4), 650-659. http://www.jstor.org/stable/1805130

Fairchild, R., Guney, Y., & Thanatawee, Y. (2014). Corporate dividend policy in Thailand : Theory and evidence. International Review of Financial Analysis, 31, 129-151. https://doi.org/10.1016/j.irfa.2013.10.006

Fama, E. F., & French, K. R. (1992). The cross‐section of expected stock returns. The Journal of Finance, 47(2), 427-465. https://doi.org/10.2307/2329112

Fama, E. F., & French, K. R. (1993). Common risk factors in the returns on stocks and bonds. Journal of Financial Economics, 33(1), 3-56. https://doi.org/10.1016/0304-405X(93)90023-5

Fama E. F., & French K. R. (2001). Disappearing dividends: changing firm characteristics or lower propensity to pay? Journal of Financial Economics, 60(1), 3–43. https://doi.org/10.1016/S0304-405X(01)00038-1

Frazzini, A., & Pedersen, L. H. (2014). Betting against beta. Journal of Financial Economics 111(1), 1-25. http://dx.doi.org/10.1016/j.jfineco.2013.10.005

Grullon, G., Michaely, R., & Swaminathan, B. (2002). Are Dividend Changes a Sign of Firm Maturity? The Journal of Business, 75(3), 387-424. http://doi.org/10.1086/339889

Gulec, O. F., & Karacaer, S. (2017). Corporate life cycle methods in emerging markets: Evidence from Turkey. Journal of Economics, Finance and Accounting, 4(3), 224-236. http://doi.org/10.17261/Pressacademia.2017.690

Lakonishok, J., & Shapiro, A. C. (1986). Systematic risk, total risk and size as determinants of stock market returns. Journal of Banking and Finance, 10(1), 115–132. https://doi.org/10.1016/0378-4266(86)90023-3

Lewis, C. M., Rogalski, R. J., & Seward, J. K. (2003). Industry conditions, growth opportunities and market reactions to convertible debt financing decisions. Journal of Banking and Finance, 27(1), 153–181. https://doi.org/10.1016/S0378-4266(01)00212-6

R.A., D., & Rahmanti, W. (2013). Return dan risiko saham pada perusahaan perata laba dan bukan perata laba. Jurnal Dinamika Akuntansi, 5(1). https://doi.org/10.15294/jda.v5i1.2563

Ross, S. (1977). The Determination of financial structure: The incentive-signalling approach. The Bell Journal of Economics, 8(1), 23-40. https://doi.org/10.2307/3003485

Teh, K., & Lau, W. (2017). The dual-beta model: Evidence from the Malaysian Stock Market. Indonesian Capital Market Review, 9(1), 39-52. https://doi.org/10.21002/icmr.v9i1.6367

Weitzman, M. L. (2013). Tail-hedge discounting and the social cost of carbon. Journal of Economic Literature, 51(3), 873-882. http://dx.doi.org/10.1257/jel.51.3.873




DOI: https://doi.org/10.32400/iaj.25404

Refbacks





Copyright (c) 2019 Novi Swandari Budiarso, Winston Pontoh

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.

PENERBIT:

PROGRAM STUDI PENDIDIKAN PROFESI AKUNTANSI

FAKULTAS EKONOMI DAN BISNIS

UNIVERSITAS SAM RATULANGI

Jl. Kampus Bahu - Manado, Sulawesi Utara, Indonesia 95115


   

 

 

 

 

 

 

 

Garuda - Garba Rujukan Digital

garuda garba rujukan digital

Garuda - Garba Rujukan Digital

garuda garba rujukan digital

Indonesia Onesearch

Indonesia Accounting Journal

Indonesia Accounting Journal (IAJ)

Indonesia Accounting Journal (IAJ) is a double blind peer-reviewed journal that is published by the Accounting Profession Program (or Program Studi Pendidikan Profesi Akuntansi-PPAk), Economics and Business Faculty, Sam Ratulangi University. Indonesia Accounting Journal (IAJ) publishes articles written in either Indonesian or English languages in the fields of accounting or finance studies.

Indonesia Accounting Journal

Indonesia Accounting Journal (IAJ) is double peer reviewed journal which published by Accounting Profession Program (or Program Studi Pendidikan Profesi Akuntansi-PPAk) of Economics and Business Faculty, Sam Ratulangi University. Indonesia Accounting Journal (IAJ) publishes articles which are not under consideration or published to other publishers for twice a year.

Indonesia Accounting Journal

Scilit is a centralized platform for all published research literature, articles with a DOI or in PubMed are indexed within hours

Indonesia Accounting Journal (Online)

Title proper: Indonesia Accounting Journal. Original alphabet of title: Basic roman Subject: Dewey : 657 Subject: Accountancy Publisher: Manado: Prodi.