Loderer, Claudio and Waelchli, Urs (2010): Firm age and performance.
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As firms grow older, their profitability seems to decline. We first document this phenomenon and show that it is very robust. Then we offer two non-exclusive explanations of why firms may age. First, corporate aging could reflect a cementation of organizational rigidities over time. Consistent with that, costs rise, growth slows, assets become obsolete, and investment and R&D activities decline. Second, older age could advance the diffusion of rent-seeking behavior inside the firm. This hypothesis is supported by the poorer governance, larger boards, and higher CEO pay we observe in older firms. Overall, firms seem to face a real senescence problem.
|Item Type:||MPRA Paper|
|Original Title:||Firm age and performance|
|Keywords:||firm age; organizational rigidities; rent-seeking; firm life cycle; corporate governance; firm performance|
|Subjects:||L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L20 - General
G - Financial Economics > G3 - Corporate Finance and Governance > G30 - General
|Depositing User:||Urs Waelchli|
|Date Deposited:||07. Nov 2010 05:57|
|Last Modified:||11. Feb 2013 18:12|
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