Firm Life Cycle and Financial Performance: Evidence from Nigeria

Abstract

Despite being a considerably essential instrument or mechanism in understanding modern organizations, a greater number of the life cycle literature is conceptually rather than empirically established. There are limited scholarly works in Nigeria about whether firm life cycle has any bearing on financial performance. This study has filled a lacuna in the nexus between firm life cycle and financial performance. It examines the effects of firm life cycle on financial performance of 91 listed firms in Nigeria over a ten-year period (2010-2019) using a correlational research design. Data were collected from the annual reports and accounts of the sampled firms and analysed using descriptive (mean, standard deviation, minimum mean and maximum mean) and inferential analytical techniques (Pearson Product Moment Correlation and Multiple Regression Analysis). We find maturity stage to have positive and significant effect on financial performance. However, we fail to find any significant effect at introductory stage, growth stage and shake-out stage. The study, therefore, concludes that the business stage of maturity is the most critical stage in financial performance consideration. The study recommends among others that managers should pay greater attention to their businesses, particularly during the period of maturity to avoid shakeout or decline.

Keywords

• decline, growth, introduction, maturity, shake-out