• Mon - Fri: 10 am - 5 pm
  • Mississauga, Ontario, Canada

Global Financial Researches

Researchers are contributing to the Financial World every day.
Follow the most classic and pragmatic Researches of Financial Research Analysts.

Powered By Academy of IFRA®


Product market strategy and corporate policies

We examine how product life cycle affects investment and financing by estimating an industry equilibrium model that embeds product portfolio characteristics. In the model, firms trade off higher profitability of newer products versus product introduction costs. Using product-level data, we find that the product dimension is critical in quantitatively explaining cash flow dynamics, corporate policies, and industry structure. We show that product introductions and capital investment are complements and that product dynamics incentivize preserving more debt capacity. Our estimates reveal that product life cycle is more pronounced for firms with smaller and more concentrated product portfolios as well as those with high product variety.

Author - Jakub Hajda, Boris Nikolov
Journal - Journal of Financial Economics

Source - https://www.sciencedirect.com/science/article/abs/pii/S0304405X2200188X