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Is the asymmetric cost behavior affected by competition factors?

Author

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  • Joonhei Cheung
  • Hyunpyo Kim
  • Seungjun Kim
  • Rong Huang

Abstract

Prior studies on the asymmetric cost behavior mainly focus on internal factors. However, managers consider both internal and external factors when making strategic cost decisions. In this paper, we investigate the relation between the asymmetric cost behavior and external competition factors. We find that Selling, General, and Administrative costs are more sticky for firms in different competition environments, proxied by higher product differentiation, higher entry costs, and larger market size. Overall, these findings suggest that the asymmetric cost behavior is affected by external factors as well as internal factors.

Suggested Citation

  • Joonhei Cheung & Hyunpyo Kim & Seungjun Kim & Rong Huang, 2018. "Is the asymmetric cost behavior affected by competition factors?," Asia-Pacific Journal of Accounting & Economics, Taylor & Francis Journals, vol. 25(1-2), pages 218-234, January.
    • Handle: RePEc:taf:raaexx:v:25:y:2018:i:1-2:p:218-234
    DOI: 10.1080/16081625.2016.1266271
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    Citations

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    Cited by:

    1. Komang Ayu Krisnadewi & Noorlailie Soewarno, 2021. "Optimism and profit-based incentives in cost stickiness: an experimental study," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 32(1), pages 7-31, March.
    2. Ibrahim, Awad Elsayed Awad & Ali, Hesham & Aboelkheir, Heba, 2022. "Cost stickiness: A systematic literature review of 27 years of research and a future research agenda," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 46(C).
    3. Babar, Md. & Habib, Ahsan, 2021. "Product market competition in accounting, finance, and corporate governance: A review of the literature," International Review of Financial Analysis, Elsevier, vol. 73(C).
    4. Riha Dedi Priantana & Abdul Rohman & Fuad, 2020. "Attainment Discrepancy Level, Firm Resources Slack, and Sticky Cost," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 11(2), pages 97-110, April.
    5. Naoum, Vasilios-Christos & Ntounis, Dimitrios & Papanastasopoulos, Georgios & Vlismas, Orestes, 2023. "Asymmetric cost behavior: Theory, meta-analysis, and implications," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 53(C).
    6. Irsa, Wolfram, 2019. "The Silent Diffusion of Sticky Costs in the HoReCa Industry," Proceedings of the ENTRENOVA - ENTerprise REsearch InNOVAtion Conference (2019), Rovinj, Croatia, in: Proceedings of the ENTRENOVA - ENTerprise REsearch InNOVAtion Conference, Rovinj, Croatia, 12-14 September 2019, pages 130-136, IRENET - Society for Advancing Innovation and Research in Economy, Zagreb.

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