기업수명주기, 시장경쟁과 투자효율성 간 관계에 관한 실증연구

This study investigates (1) whether firms' current economic status, named firm life cycle, influences their investment efficiency and (2) whether and how market competition alters the relation between firm life cycle stages and investment efficiency. Corporate investment decisions are affected by both firm-level and industry-level factors. Prior literature on firm life cycle suggests that firms are likely to experience distinct stages of development, and that management decisions are influenced by firms' economic characteristics reflected in these stages. Applying the concept of firm life cycle to investing activities, we examine whether investment efficiency is systematically related to firm life cycle stages. Another line of research finds that product market competition is an important driver of managerial decisions. We provide empirical evidence on the relation between the intensity of product market competition and corporate investment efficiency, and extend prior literature by examining the differential role of market competition across life cycle stages. Following Dickinson(2011), we use the combinations of the signs of firms' operating, investing, and financing cash flows to classify individual firm-years into one of the following five life cycle stages: an introduction stage, a growth stage, a mature stage, a shake-out stage, and a decline stage. An introduction stage is where both operating and investing cash flows are negative while financing cash flows are positive. In a growth stage, operating cash flows turn positive while investing (financing) cash flows remain negative (positive). Firms in a mature stage have positive cash flows only in operating activities. A shake-out stage encompasses diverse patterns of cash flows: all positive, all negative, or negative only in financing activities. Finally, a decline stage is where operating (investing) cash flows are negative (positive) as firms exit the market. We use Herfindahl-Hirschman index (HHI) as a proxy for the degree of product market competition. Regarding investment efficiency, we adopt the model of McNichols and Stubben(2008) to estimate the extent of over- or under-investment. Our sample consists of 7,920 firm-year observations for the period from 2006 to 2013. Of these, 1,426 firm-years fall into the introduction stage while 2,333 firm-years have cash flow patterns of the growth stage. Mature and shake-out firm-years are 2,575 and 905, respectively. Finally, 681 firm-years belong to the decline stage. Empirical results confirm that corporate investment efficiency differs across life cycle stages. On average, our sample firms appear to under-invest. When we partition the entire sample into individual life cycle stages, we find that the firms in both the introduction stage and the growth stage over-invest while those in the mature and subsequent stages under-invest. The absolute value of inefficient investment decreases significantly in the mature stage, and such improvement appears to stem from the reduction of over-investment in earlier stages. We also find that market competition generally improves investment efficiency by lessening over- and under-investments. Intense market competition reduces the over-investment of firms in the introduction stage and the under-investment of firms in the mature stage. These results support the governance role of product market competition: market competition works as a disciplinary mechanism by decreasing managerial overconfidence in the introduction stage and managerial entrenchment in the mature stage. We also conduct several sensitivity analyses and find that our results hold. For example, when we use average cash flows in two years (current and the past year) to classify firm-years into one of the five life cycle stages, we get qualitatively the same results as those in the main test. The primary results are generally robust when we use alternative proxies for investment efficiency and market competition and when we consider alternative model specifications. This study contributes to the extant literature in multiple ways. First, we extend the literature on firm life cycle and investment efficiency by analyzing the systematic relation between the two factors. Prior research on corporate investment decisions paid little attention to the impact of firms' economic status captured by life cycle on investment efficiency. Investors might gain insights on corporate investment efficiency by focusing on the pattern of cash flows. Second, this study provides policy implications to regulators by demonstrating that market competition has a positive impact on corporate investment efficiency. Our results suggest that policy makers need to consider the role of competition and firms’ development stages when preparing for investment stimulus packages.