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Asymmetric Cost Behavior
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Book Synopsis Asymmetric Cost Behavior by : Kristina Reimer
Download or read book Asymmetric Cost Behavior written by Kristina Reimer and published by Springer. This book was released on 2018-07-09 with total page 156 pages. Available in PDF, EPUB and Kindle. Book excerpt: The thesis of Kristina Reimer provides a comprehensive analysis of asymmetric cost behavior (also known as cost stickiness) by discussing its origin and development in the theoretical and empirical research from the 1920s of the past century up until today. Further, using an empirical approach, she investigates the implications of asymmetric cost behavior for credit and financial risk of a firm. In addition, she provides an introduction into credit risk fundamentals by focusing on credit default swaps. Thereby she analyses the development of credit default swap market as well as the components of credit spreads. Finally, she provides several suggestions for future research.
Book Synopsis Asymmetric Cost Behavior by : Rajiv D. Banker
Download or read book Asymmetric Cost Behavior written by Rajiv D. Banker and published by . This book was released on 2015 with total page 60 pages. Available in PDF, EPUB and Kindle. Book excerpt: We synthesize the growing literature on asymmetric cost behavior -- a new way of thinking about costs and, by extension, earnings. While the traditional cost behavior model describes a mechanistic relation between activity and costs, this alternative view recognizes the primitives of cost behavior -- resource adjustment costs and managerial decisions. These primitives give rise to “sticky” and “anti-sticky” costs, along with traditional “fixed” and “variable” costs as extreme cases. We formulate an integrated framework of asymmetric cost behavior and review the empirical evidence in support of this framework and its implications for both cost and financial accounting research. We clarify empirical issues and show that recent contrary claims about the validity of findings in the literature are unwarranted because of econometric errors. We present new comprehensive evidence from Global Compustat, which demonstrates that asymmetric cost behavior is a pervasive global phenomenon. We also discuss research opportunities.
Book Synopsis Determinants of Asymmetric Cost Behavior by : Y. Shan
Download or read book Determinants of Asymmetric Cost Behavior written by Y. Shan and published by . This book was released on 2019 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis A New Perspective on Asymmetric Cost Behavior by : Eti Einhorn
Download or read book A New Perspective on Asymmetric Cost Behavior written by Eti Einhorn and published by . This book was released on 2023 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The research on asymmetric cost behavior, despite its large body and fundamental importance, has evolved empirically and lacks a theoretical guidance. In light of this gap in the literature, we offer a novel theoretical framework for studying the phenomenon of cost asymmetry. Our study highlights the fundamental nature of cost asymmetry by showing that it is expected to emerge in equilibrium, even in a frictionless setting that is devoid of any known causes of cost asymmetry. This interestingly suggests that cost behavior is asymmetric by default, indicating that all the previously explored determinants of cost stickiness or cost anti-stickiness either enhance or counterbalance the already fundamentally arising cost asymmetry. On this ground, we additionally develop a capital market oriented theory that explores a new source for the empirically observed cost stickiness pattern by demonstrating a signaling mechanism that relies on managerial decisions of resource adjustment in response to demand shocks.
Book Synopsis Cost Stickiness and Cost Inertia by : Mark C. Anderson
Download or read book Cost Stickiness and Cost Inertia written by Mark C. Anderson and published by . This book was released on 2016 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: In the asymmetric cost behavior model, managers play an active role in determining cost behavior by adding or removing resources as activity changes. Cost stickiness occurs when managers deliberately retain slack resources resulting from a decline in sales activity between periods. Because both sales and long-term capital investments change between periods, we estimate a model of cost behavior that includes two cost drivers: revenue as a volume of activity driver and property, plant and equipment (PP&E) as an assets-in-place driver. We associate cost inertia with slack resources retained when assets-in-place are reduced. We find that changes in SG&A costs separate between the two cost drivers, and that the explanatory power of an asymmetric cost behavior model including PP&E as a second driver is significantly greater than the explanatory power of the single-driver cost behavior model. Similar insights are obtained when we replace SG&A costs with employee headcount or employee costs as the cost measure of interest. In all cases, we find that the cost inertia term is significantly negative and relatively large in magnitude. We estimate an expanded model that conditions analysis of current year cost behavior on the direction of sales change in the previous period and find that the pattern of cost changes is consistent with both cost stickiness and cost inertia.
Book Synopsis The Moderating Effect of Prior Sales Changes on Asymmetric Cost Behavior by : Rajiv D. Banker
Download or read book The Moderating Effect of Prior Sales Changes on Asymmetric Cost Behavior written by Rajiv D. Banker and published by . This book was released on 2015 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt: Recent research documents the empirical phenomenon of ldquo;sticky costsrdquo; and attributes it to a theory of deliberate managerial decisions in the presence of adjustment costs. We refine this theoretical explanation and show that it gives rise to a more complex pattern of asymmetric cost behavior that combines two opposing processes: cost stickiness conditional on a prior sales increase and cost anti-stickiness conditional on a prior sales decrease. These predictions reflect the structure of optimal decisions with adjustment costs and the impact of prior sales changes on managers' expectations about future sales changes. Empirical estimates for Compustat data support our hypotheses. We further verify our predictions using additional proxies for managers' expectations, and show that our model offers important new insights.
Book Synopsis Asymmetric Cost Behaviour by : Vasilios-Christos Naoum
Download or read book Asymmetric Cost Behaviour written by Vasilios-Christos Naoum and published by . This book was released on 2023 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Asymmetric cost behavior is an emerging and dynamic research area within the context of contemporary cost management research. This study systematically reviews asymmetric cost behavior research published in ABS-ranked journals (53 English-speaking journals) between 2003 and 2020. Additionally, we provide a review of the econometric models and instruments employed in empirical asymmetric cost behavior research and a meta-analysis of prior empirical evidence for the main determinants of the direction and intensity of the asymmetric cost behavior phenomenon. Several research streams have been recognized within two major themes of cost asymmetry empirical research: (i) determinants of the asymmetric cost behavior phenomenon, and (ii) cost asymmetry as a determinant of earnings behavior, earnings prediction, and other microeconomic and macroeconomic phenomena. Each major component of our review is accompanied by critical analysis and suggestions for future research. Meta-analysis of the existing body of cost asymmetry studies reveals no publication bias but increases heterogeneity within existing empirical evidence for cost asymmetry.
Book Synopsis The Cost Stickiness Phenomenon by : Daniel Baumgarten
Download or read book The Cost Stickiness Phenomenon written by Daniel Baumgarten and published by Springer Science & Business Media. This book was released on 2012-04-23 with total page 124 pages. Available in PDF, EPUB and Kindle. Book excerpt: Understanding cost behavior is a fundamental element of cost accounting and the management of a firm. Deviating from the traditional assumption of symmetric cost behavior, numerous recent research studies show that costs are sticky, that is, they decrease less when sales fall than they increase when sales rise. Daniel Baumgarten comprehensively analyzes the cost stickiness phenomenon by discussing its development and all relevant findings presented in the research literature. Furthermore, he provides several suggestions for future research and discusses important implications of cost stickiness for fundamental analysis and analysts’ forecasts by means of two comprehensive empirical analyses.
Book Synopsis Understanding Corporate Payouts and Asymmetric Cost Behavior by : Roman Schick
Download or read book Understanding Corporate Payouts and Asymmetric Cost Behavior written by Roman Schick and published by . This book was released on 2021 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis The Magnitude of Sales Changes and Asymmetric Cost Behavior by : Mustafa Ciftci
Download or read book The Magnitude of Sales Changes and Asymmetric Cost Behavior written by Mustafa Ciftci and published by . This book was released on 2018 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We investigate the impact of the magnitude of current sales changes on asymmetric cost behavior. We expect that managers are likely to consider small (large) current sales decreases as temporary (permanent). Therefore, they will be less (more) likely to cut costs for small (large) current sales decreases. Accordingly, we predict and find that, conditional on prior sales increase, cost stickiness is greater for small current sales changes than that for large current sales changes. In addition, prior research suggests that, conditional on prior sales decrease, slack resources retained from the prior period might lead to cost anti-stickiness. We expect that slack resources retained from the prior period will have a greater (smaller) impact on cost behavior for small (large) current sales changes. Accordingly, we predict and find that, conditional on prior sales decrease, cost anti-stickiness is greater for small current sales changes than that for large current sales changes.
Book Synopsis A Contextual Analysis of the Impact of Managerial Expectations on Asymmetric Cost Behavior by : Jason V. Chen
Download or read book A Contextual Analysis of the Impact of Managerial Expectations on Asymmetric Cost Behavior written by Jason V. Chen and published by . This book was released on 2019 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine the effect of managerial expectations on asymmetric cost behavior in the context of resource adjustment costs and unused resource constraints. Our results show that the incremental impact of managerial expectations on cost asymmetry is the strongest when adjustment costs and unused resources are high. Conversely, when both are low, expectations have no impact on the degree of cost asymmetry. Furthermore, when the degree of unused resources is high, managerial pessimism is associated with anti-sticky cost behavior but managerial optimism reverses this relation and results in cost stickiness. Finally, we find the strongest cost stickiness under the following: a low degree of unused resources, a high magnitude of adjustment costs, and optimistic managerial expectations; by contrast, the strongest cost anti-stickiness occurs when all three drivers operate in the opposite direction. Our study suggests that additional economic determinants should be considered when assessing the impact of managerial expectations on cost behavior.
Book Synopsis Corporate Payout Policy by : Harry DeAngelo
Download or read book Corporate Payout Policy written by Harry DeAngelo and published by Now Publishers Inc. This book was released on 2009 with total page 215 pages. Available in PDF, EPUB and Kindle. Book excerpt: Corporate Payout Policy synthesizes the academic research on payout policy and explains "how much, when, and how". That is (i) the overall value of payouts over the life of the enterprise, (ii) the time profile of a firm's payouts across periods, and (iii) the form of those payouts. The authors conclude that today's theory does a good job of explaining the general features of corporate payout policies, but some important gaps remain. So while our emphasis is to clarify "what we know" about payout policy, the authors also identify a number of interesting unresolved questions for future research. Corporate Payout Policy discusses potential influences on corporate payout policy including managerial use of payouts to signal future earnings to outside investors, individuals' behavioral biases that lead to sentiment-based demands for distributions, the desire of large block stockholders to maintain corporate control, and personal tax incentives to defer payouts. The authors highlight four important "carry-away" points: the literature's focus on whether repurchases will (or should) drive out dividends is misplaced because it implicitly assumes that a single payout vehicle is optimal; extant empirical evidence is strongly incompatible with the notion that the primary purpose of dividends is to signal managers' views of future earnings to outside investors; over-confidence on the part of managers is potentially a first-order determinant of payout policy because it induces them to over-retain resources to invest in dubious projects and so behavioral biases may, in fact, turn out to be more important than agency costs in explaining why investors pressure firms to accelerate payouts; the influence of controlling stockholders on payout policy --- particularly in non-U.S. firms, where controlling stockholders are common --- is a promising area for future research. Corporate Payout Policy is required reading for both researchers and practitioners interested in understanding this central topic in corporate finance and governance.
Book Synopsis The Effect of Strategy on Asymmetric Cost Behavior of SG&A Expenses by : Apostolos Ballas
Download or read book The Effect of Strategy on Asymmetric Cost Behavior of SG&A Expenses written by Apostolos Ballas and published by . This book was released on 2018 with total page 64 pages. Available in PDF, EPUB and Kindle. Book excerpt: The current study examines the effect of strategy and managerial ability on asymmetric cost behavior of SG&A expenses. We use a sample of US listed firms for the period 1991-2014 to provide empirical evidence that sticky cost phenomenon is associated with firms' strategic orientation. Our findings suggest that a firm's strategic orientation determines the direction of cost asymmetry in the case of SG&A expenses. Firms classified as prospectors exhibit SG&A cost stickiness whereas firms classified as defenders exhibit SG&A cost anti-stickiness. Sensitivity tests indicate that a firm's decisions on its strategic positioning and its portfolio of strategic intangible resources affect resource allocation decisions that are associated with the direction of asymmetric cost behavior. In addition, is seems that strategy remains a significant contributing factor concerning the intensity of cost asymmetry in the case of SG&A expenses under the presence of different levels of market concentration. Thus, the presence of asymmetric cost behavior seems to be an outcome of managerial decisions rather than a primary cause of a firm's strategic positioning. Data availability: Data are publicly available.
Book Synopsis Do Managers Forecast Asymmetric Cost Behavior? by : Michael E. Bradbury
Download or read book Do Managers Forecast Asymmetric Cost Behavior? written by Michael E. Bradbury and published by . This book was released on 2017 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines cost behaviour in the municipal setting and finds evidence of cost stickiness. Furthermore, as municipals in New Zealand are required to produce forecasts, it allows us to investigate whether asymmetric cost behaviour is incorporated into forecasts. We document an asymmetric association between actual costs and revenues. Furthermore, costs are super-sticky as they increase even when revenues decrease. Cost stickiness remains after controlling for cost structure. Forecast cost behaviour is statistically indistinguishable from actual behaviour. We contribute to the cost stickiness literature by extending it to a municipal setting and showing the asymmetric relation between costs and revenues is incorporated in managerial forecasts.
Book Synopsis Labor Demand by : Daniel S. Hamermesh
Download or read book Labor Demand written by Daniel S. Hamermesh and published by Princeton University Press. This book was released on 1996-01-28 with total page 466 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this book Daniel Hamermesh provides the first comprehensive picture of the disparate field of labor demand. The author reviews both the static and dynamic theories of labor demand, and provides evaluative summaries of the available empirical research in these two subject areas. Moreover, he uses both theory and evidence to establish a generalized framework for analyzing the impact of policies such as minimum wages, payroll taxes, job- security measures, unemployment insurance, and others. Covering every aspect of labor demand, this book uses material from a wide range of countries.
Book Synopsis Capacity Constraints and Asymmetric Cost Behavior by : Eric Noreen
Download or read book Capacity Constraints and Asymmetric Cost Behavior written by Eric Noreen and published by . This book was released on 2017 with total page 51 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper provides a formal model to help understand and motivate the empirical "sticky" cost literature. The verbal arguments used to generate hypotheses in the sticky cost literature emphasize the costs of adding or removing capacity and are often concerned with how managers are likely to react to various scenarios involving more or less excess capacity. Likewise, the model in this paper focuses on the decision to expand or contract capacity, which is a constraint that either limits output or results in a discontinuous increase in marginal cost. Tests run on simulated data from this model are strikingly similar to the results of tests on real world data and suggest that the formal model captures important real world phenomenon.
Book Synopsis Dual-channel Supply Chain Decisions With Risk-averse Behavior by : Bo Li
Download or read book Dual-channel Supply Chain Decisions With Risk-averse Behavior written by Bo Li and published by World Scientific. This book was released on 2021-08-25 with total page 241 pages. Available in PDF, EPUB and Kindle. Book excerpt: In the era of e-commerce and digitalization, new commercial patterns and opportunities are emerging. For example, in addition to traditional reselling marketing channels, manufacturers can easily open direct channels using a variety of digital marketing strategies. These new marketing channels will cause conflict and competition between manufacturers and resellers. This raises the important question of how to make optimal decisions for multiple players in dual-channel supply chain contexts. Within changing and uncertain operation environments, business enterprises must face tougher challenges than before to survive in competitive markets.This book aims to address representative decision-making problems in dual-channel supply chains with risk-averse channel members. The most recently developed risk assessment technique, Conditional Value-at-Risk (CVaR), will be adopted as the predominant criterion to measure the risk-averse attitude. Based on game theory, important issues such as channel selection, pricing, order quantity, manufacturer encroachment, greening strategy, consumer return policies, financing strategies, channel coordination, contract design, information asymmetry, and capacity constraint will be modeled and analyzed. This book will help readers better understand operations management in dual-channel supply chain contexts with risk-averse behaviors, and will also provide effective techniques and tools for researchers and offer managerial insights for practitioners.
