The Ability of Firm Life Cycle Patterns in Explaining Financial Flexibility (Based on the Adjusted Financial Flexibility Index)

The purpose of the present study is to investigate the ability of different models of firm life cycle in explaining financial flexibility in Iran Stock Exchange. Therefore, to achieve the research objective, an adjusted and multidimensional financial flexibility index to reflect the current characteristics of the Iranian Stock Exchange in the form of composite index based on the experts' views using the hierarchical analysis method and the coefficient of variation was extracted, and then using this adjusted criterion of financial flexibility, the ability of different patterns of firm life cycle to explain financial flexibility was tested. The research hypotheses were tested on a sample of 180 companies listed on the Tehran Stock Exchange during the years 2009 to 2019 using panel data regression. The results showed that generally, among the three life cycle models, the Dickinson model combines the net cash flow from operating, investing and financing activities of a company and provides a more complete and comprehensive life cycle map of the company at any date of financial statements, and this reason has increased the ability of Dickinson’s model in explaining financial flexibility.