Age of the Firm and Financial Stability: Does Experience Matter

Abstract

The financial stability of firms plays a pivotal role in economic resilience, particularly in times of market volatility and global uncertainties. This study examines the relationship between firm age and financial stability, focusing on industrial firms listed on the National Stock Exchange (NSE) between 2017 and 2023. The financial stability is assessed in terms of profitability, liquidity, solvency, debt management and ownership structure at various epochs. Old firms benefit from their accumulated financial resources as well as more refined decision-making abilities and enhanced risk management capabilities in contrast to new organizations. Youthful businesses experience financial instability because they depend excessively on loans and face stability problems. The Study adjusts for the financial indicators and performs multiple regression analysis of the impact of business age on the financial health. The Study uses descriptive and correlational analysis, to substantiate the assertion that mature enterprises are characteristically of greater net worth, greater profitability, and rely less on debt. The lessons reinforce the importance of experience in helping firms grow and sustaining their businesses and minimizing their financial risks. Investors and policymakers can use these insights to design well informed choices on regulatory framework, credit valuations and investment strategies.