Firm Age and Financial Performance: The Firm Life-Cycle Theoretical Perspective of Private Limited Companies In Uganda

Abstract

Purpose: While the financial performance of private companies has invoked intense interest globally, this study aimed to investigate the relationship between firm age and the financial performance of private limited companies in Uganda. Methodology: The study adopted a positivist paradigm and a cross-sectional design. A structured self-administered questionnaire was deployed to gather quantitative data from Accountants, Auditors, CEOs, and Board Members who were purposively selected. Three hundred ninety-four private companies in Central and Western Uganda were sampled. The relationship was assessed using Pearson correlation and standard regression analysis techniques. Findings: The study established a positive relationship between firm age and financial performance. It was established that firm age accounts for 14% of the variance in financial performance among private limited companies in Uganda. The study recommends that managers prioritize factors that guarantee the long-term existence of businesses by devising sound investment and operational policies that match the life-cycle stages of their firms. Recommendations: This study cements our insights on a firm age-financial performance nexus in Uganda’s private sector and highlights the significance of age towards financial performance. Findings provide insights into devising promising business approaches and guide management in setting priorities to achieve long-term business survival and better financial performance.