Abstract

Risk-taking behavior over a firm's life cycle and its relationship with financial performance are examined in this research. The life cycle is one of the most important factors which determines the properties of a firm's behavior and affects its resource structure, empowerment, and abilities. So an adjusted version of ROA about industry effect is used to measure risk-taking behavior; the pattern of cash flow in each category including operating, investing, and financing, and ROA proxy are considered to define life cycle and financial performance respectively. As a consequence, financial data for 150 firms from 2008 to 2015 with some considerations are collected. To include the dynamic behavior of risk-taking, the generalized method of moments (GMM) is run to analyze data. The results reveal that firms show riskier behavior in the introduction and decline phases in comparison with the maturity phase. In addition, firms that are in introductory and decline phases operate much weaker than others from a financial aspect.