CORPORATE COST EFFICIENCY ACROSS FIRM LIFE-CYCLE STAGES EVIDENCE FROM 134 ECONOMIES

Abstract

This study investigates whether the operating cycle is systematically linked to corporate SGA overhead and the relationship between them is different across stages of the firm life cycle and institutional environments. There are 317,142 firm-year observations in the underlying panel, 134 economies, and the complete-case benchmark regression has 312,041 observations. The operating-cycle term is negative, the operating-cycle-squared term is positive, and there is a convex cost function with estimated minimum at 77.7 days; in the benchmark year-fixed-effects quadratic specification. The minimum is estimated to be 61.0 days in the sector-adjusted model, and approximately 9.8 days in the firm-fixed-effects model, which suggests that the evidence from within firms is not as strong as the evidence from the cross-sectional analysis. The life-cycle estimates are convex but vary in number: between 49.8 days in the Introduction and 82.4 days in the Growth stage. But formal Delta-method tests in the joint life-cycle-by-institution model are unable to show statistically significant differences between advanced and emerging/developing economies. Component models further show that receivables collection has an economically interpretable interior vertex, while inventory and payables vertices fall outside observed support. Lagged, instrumental-variable, high-cash, and post-2010 sensitivity specifications preserve the broad convex pattern, but the available diagnostics do not justify causal claims. The evidence therefore supports a contingent operating-cost trade-off rather than a universal policy target: moderate operating-cycle duration is associated with lower SG&A overhead in pooled and sector-adjusted models, while the location and precision of the estimated minimum depend on specification, firm characteristics, and organizational stage.