Product Life Cycles in Corporate Finance
Abstract
We develop a novel 10-K text-based model of product life cycles and examine firm investment policies. Conditioning on the life cycle substantially improves the power of Q to explain investment, and reveals a natural ordering of investments over the life cycle. While R&D and CAPX sensitivity are high early in the cycle, acquisitions arise as firms mature, and divestitures and product extension investments arise as firms decline. Q sensitivities...
Paper Details
Title
Product Life Cycles in Corporate Finance
Published Date
Jan 1, 2018
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