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The Effect of Age on Firm’s Performance: Evidence From Family-Owned Companies

Year 2018, Volume: 11 Issue: 2, 129 - 137, 25.04.2018
https://doi.org/10.25287/ohuiibf.403257

Abstract










In this
paper, we investigate the link between age and firm performance by analysing
the family-owned companies in a developing country, Turkey. We adopt ordinary
least squares estimation to the period between 2008 and 2016 using 38 listed
and non-financial family-owned companies. We use profitability as a proxy for
firm performance. Profitability is defined as earnings before interest and tax
divided by total assets. As a result, we capture the convex relationship
between age and profitability of family-owned companies which suggests that
younger firms have higher profits until they reach a certain age. When they
pass that threshold age older firms perform better than younger firms. This
result is robust when we control for heteroscedasticity and include other
control variables such as liquidity, debt ratio and asset turnover.

References

  • Akben-Selcuk, E. (2016). Does Firm Age Affect Profitability? Evidence from Turkey. International Journal of Economic Sciences, 3, 1-9.
  • Akinyomi, O. J. & Olagunju, A. (2013). Effect of firm size on profitability: Evidence from Nigerian manufacturing sector. Prime Journals of Business Administration and Management, 3(9), 1171-1175.
  • Anderson, R. & Reeb, D. (2003). Founding-family ownership and firm performance: evidence from the S&P 500. The Journal of Finance, 58 (3), 1301-1328.
  • Babaola, Y. A. (2013). The effect of firm size on firms profitability in Nigeria. Journal of Economics and Sustainable Development, 4(5), 90-94.
  • Barron, D.N., West E. & Hannan, M.T. (1994). A time to growth and a time to die: Growth and mortality of credit unions in New York, 1914-1990, American Journal of Sociology, 100(2), 381-421.
  • Basti, E., Bayyurt, N. & Akın, A. (2011). A comparative performance analysis of foreign and domestic manufacturing companies in Turkey. European Journal of Economic and Political Science, 4(2), 125-137.
  • Bianco, M., Bontempi, M.E., Golinelli, R. & Parigi, G. (2013). Family firms’ investments, uncertainty and opacity. Small Business Economics, 40(4), 1035–1058.
  • Coad, A., Segarra-Blascoand, A. & Teruel, M. (2013). Like milk or wine: does firm performance improve with age?. Structural Change and Economic Dynamics, 24, 173-189.
  • Dogan, M. (2013). Does firm size affect the firm profitability? Evidence from Turkey. Research Journal of Finance and Accounting, 4(4), 53-59.
  • Ghafoorifard, M., Sheykh, B., Shakibaee, M. & Joshaghan, N.S. (2014). Assessing the relationship between firm size, age and financial performance in listed companies on Tehran Stock Exchange. International Journal of Scientific Management and Development, 2(11), 631-635.
  • Gurbuz, A.O., Aybars, A. & Kutlu, O. (2010). Corporate governance and financial performance with a perspective on institutional ownership: empirical evidence from Turkey. Journal of Applied Management Accounting Research, 8(2), 21-37.
  • Holderness, C. & Sheehan, D. (1988). The role of majority shareholders in publicly held corporations: an exploratory analysis. Journal of Financial Economics, 20(1/2), 317-346.
  • Holderness, C., Kroszner, R. & Sheehan, D. (1999). Were the good old days that good? Changes in managerial stock ownership since the great depression. The Journal of Finance, 54 (2), 435-469.
  • Jensen, G., Solberg, D. &Zorn, T. (1992). Simultaneous determination of insider ownership, debt, and dividend policies. Journal of Financial and Quantitative Analysis, 27 (2), 247-263.
  • Kellermanns, F., Eddleston, A., Sarathy, R. & Murphy, F. (2012). Innovativeness in family firms: a family influence perspective. Small Business Economics, 38 (1), 85-101.
  • Kipesha, E.F. (2013). Impact of size and age on firm performance: Evidences from Microfinance Institutions in Tanzania, Research Journal of Finance and Accounting, 4(5), 105-116.
  • Loderer, C.F. & Waelchli, U. (2010). Firm age and performance, SSRN working paper. Retrieved March 01, 2018 (de indirildi) from the World Wide Web: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1342248.
  • Lopez–Gracia, J. & Sanchez–Andujar, S. (2007). Financial structure of the family business: evidence from a group of small Spanish firms. Family Business Review. 20, 269-287.
  • Mazumdar, D. (1991). Import-Substituting Industrialization and Protection of the Small-Scale: The Indian Experience in the Textile Industry. World Development, 19(9), 1197–1213.
  • Osunsan O.K., Nowak J., Mabonga E., Pule S., Kibirige A.R. & Baliruno J.B. (2015). Firm age and performance in Kampala, Uganda: A selection of small business enterprises. International Journal of Academic Research in Business and Social Sciences, 5(4), 364-374.
  • Owolabi, S. A. & Alu, C. N. (2012). Effective Working Capital Management and Profitability: A Study of Selected Quoted Manufacturing Companies in Nigeria. Economics and Finance Review, 2(6), 55–67.
  • Owolabi, S.A. & Inyang, U. E. (2013). International pragmatic review and assessment of capital structure determinants. Kuwait Chapter of Arabian Journal of Business and Management Review, 2(6), 82-96.
  • Papatogonas, E. M. (2007). Financial performance of large and small firms: Evidence from Greece. International Journal of Financial Service Management, 2(1/2), 14-20.
  • Penrose, E. T. (1959). The Theory of the Growth of the Firm. Oxford: Basil Blackwell.
  • Serrasqueiro, Z., Nunes, P. M. & Da Silva, J. V. (2016). The Influence of Age and Size on Family-Owned Firms’ Financing Decisions: Empirical Evidence Using Panel Data. Long Range Planning, 49, 723-745.
  • White, H.A. (1980). Heteroskedasticity-consistent covariance matrix estimator and a direct test for heteroscedasticity. Econometrica, 48(4), 817–838.

Yaşın Firmanın Performansı Üzerindeki Etkisi: Aile Şirketlerinden İncelemeler

Year 2018, Volume: 11 Issue: 2, 129 - 137, 25.04.2018
https://doi.org/10.25287/ohuiibf.403257

Abstract










Bu araştırmada,
gelişmekte olan bir ülke olarak sınıflandırlan Türkiye’deki aile şirketleri
analiz edilerek firmanın yaşı ve firma performansı arasındaki bağlantı
araştırılmıştır. 2008 ve 2016 yılları arasında, borsada işlem gören ve finans
sektöründe olmayan 38 aile şirketinin verileri en küçük kareler yöntemi
uygulanarak analiz edilmistir. Firmanın performansını ölçmek için firmanın karı
kullanılmıştır. Kâr, firmanın faiz ve vergi öncesi karının toplam varlıklara
bölünmesiyle hesaplanmıştır. Sonuç olarak, aile şirketlerinde firma yaşı ve
kârlılığı arasındaki konveks bir ilişki bulunmuştur. Diğer bir değişle, genç
firmaların belirli bir yaşa gelene kadar daha yüksek kazançlar elde ettikleri
sonucuna varılmıştır. Fakat belirli bir olgunluğa eriştikten sonra yaşlı
firmalar, genç firmalardan daha iyi performans göstermektedirler. Bu sonuç
değişen varyansı kontrol ettiğimiz zaman ya da farklı bağımsız değişkenler olan
likidite, borç oranı veya aktif devir hızını eklediğimiz zaman da geçerli
olmaktadır.

References

  • Akben-Selcuk, E. (2016). Does Firm Age Affect Profitability? Evidence from Turkey. International Journal of Economic Sciences, 3, 1-9.
  • Akinyomi, O. J. & Olagunju, A. (2013). Effect of firm size on profitability: Evidence from Nigerian manufacturing sector. Prime Journals of Business Administration and Management, 3(9), 1171-1175.
  • Anderson, R. & Reeb, D. (2003). Founding-family ownership and firm performance: evidence from the S&P 500. The Journal of Finance, 58 (3), 1301-1328.
  • Babaola, Y. A. (2013). The effect of firm size on firms profitability in Nigeria. Journal of Economics and Sustainable Development, 4(5), 90-94.
  • Barron, D.N., West E. & Hannan, M.T. (1994). A time to growth and a time to die: Growth and mortality of credit unions in New York, 1914-1990, American Journal of Sociology, 100(2), 381-421.
  • Basti, E., Bayyurt, N. & Akın, A. (2011). A comparative performance analysis of foreign and domestic manufacturing companies in Turkey. European Journal of Economic and Political Science, 4(2), 125-137.
  • Bianco, M., Bontempi, M.E., Golinelli, R. & Parigi, G. (2013). Family firms’ investments, uncertainty and opacity. Small Business Economics, 40(4), 1035–1058.
  • Coad, A., Segarra-Blascoand, A. & Teruel, M. (2013). Like milk or wine: does firm performance improve with age?. Structural Change and Economic Dynamics, 24, 173-189.
  • Dogan, M. (2013). Does firm size affect the firm profitability? Evidence from Turkey. Research Journal of Finance and Accounting, 4(4), 53-59.
  • Ghafoorifard, M., Sheykh, B., Shakibaee, M. & Joshaghan, N.S. (2014). Assessing the relationship between firm size, age and financial performance in listed companies on Tehran Stock Exchange. International Journal of Scientific Management and Development, 2(11), 631-635.
  • Gurbuz, A.O., Aybars, A. & Kutlu, O. (2010). Corporate governance and financial performance with a perspective on institutional ownership: empirical evidence from Turkey. Journal of Applied Management Accounting Research, 8(2), 21-37.
  • Holderness, C. & Sheehan, D. (1988). The role of majority shareholders in publicly held corporations: an exploratory analysis. Journal of Financial Economics, 20(1/2), 317-346.
  • Holderness, C., Kroszner, R. & Sheehan, D. (1999). Were the good old days that good? Changes in managerial stock ownership since the great depression. The Journal of Finance, 54 (2), 435-469.
  • Jensen, G., Solberg, D. &Zorn, T. (1992). Simultaneous determination of insider ownership, debt, and dividend policies. Journal of Financial and Quantitative Analysis, 27 (2), 247-263.
  • Kellermanns, F., Eddleston, A., Sarathy, R. & Murphy, F. (2012). Innovativeness in family firms: a family influence perspective. Small Business Economics, 38 (1), 85-101.
  • Kipesha, E.F. (2013). Impact of size and age on firm performance: Evidences from Microfinance Institutions in Tanzania, Research Journal of Finance and Accounting, 4(5), 105-116.
  • Loderer, C.F. & Waelchli, U. (2010). Firm age and performance, SSRN working paper. Retrieved March 01, 2018 (de indirildi) from the World Wide Web: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1342248.
  • Lopez–Gracia, J. & Sanchez–Andujar, S. (2007). Financial structure of the family business: evidence from a group of small Spanish firms. Family Business Review. 20, 269-287.
  • Mazumdar, D. (1991). Import-Substituting Industrialization and Protection of the Small-Scale: The Indian Experience in the Textile Industry. World Development, 19(9), 1197–1213.
  • Osunsan O.K., Nowak J., Mabonga E., Pule S., Kibirige A.R. & Baliruno J.B. (2015). Firm age and performance in Kampala, Uganda: A selection of small business enterprises. International Journal of Academic Research in Business and Social Sciences, 5(4), 364-374.
  • Owolabi, S. A. & Alu, C. N. (2012). Effective Working Capital Management and Profitability: A Study of Selected Quoted Manufacturing Companies in Nigeria. Economics and Finance Review, 2(6), 55–67.
  • Owolabi, S.A. & Inyang, U. E. (2013). International pragmatic review and assessment of capital structure determinants. Kuwait Chapter of Arabian Journal of Business and Management Review, 2(6), 82-96.
  • Papatogonas, E. M. (2007). Financial performance of large and small firms: Evidence from Greece. International Journal of Financial Service Management, 2(1/2), 14-20.
  • Penrose, E. T. (1959). The Theory of the Growth of the Firm. Oxford: Basil Blackwell.
  • Serrasqueiro, Z., Nunes, P. M. & Da Silva, J. V. (2016). The Influence of Age and Size on Family-Owned Firms’ Financing Decisions: Empirical Evidence Using Panel Data. Long Range Planning, 49, 723-745.
  • White, H.A. (1980). Heteroskedasticity-consistent covariance matrix estimator and a direct test for heteroscedasticity. Econometrica, 48(4), 817–838.
There are 26 citations in total.

Details

Primary Language English
Subjects Economics
Journal Section Articles
Authors

Özkan Haykır

Mehmet Sinan Çelik

Publication Date April 25, 2018
Submission Date March 8, 2018
Acceptance Date March 31, 2018
Published in Issue Year 2018 Volume: 11 Issue: 2

Cite

APA Haykır, Ö., & Çelik, M. S. (2018). Yaşın Firmanın Performansı Üzerindeki Etkisi: Aile Şirketlerinden İncelemeler. Ömer Halisdemir Üniversitesi İktisadi Ve İdari Bilimler Fakültesi Dergisi, 11(2), 129-137. https://doi.org/10.25287/ohuiibf.403257

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