Purpose With a particular emphasis on corporate strategies for innovation, the purpose of this paper is to examine how cost behaviour operates under conditions of strong competition in the retail industry. Design/methodology/approach Retail companies listed on the Indonesian, Singaporean and Malaysian capital markets are studied using the regression analysis method. Findings The findings of this study show the sticky behaviour of changes in the selling, general and administrative (SGA) costs when companies are under competitive pressure. When sales increase, SGA costs will increase; however, when sales decline, SGA costs evidently increase. This is especially true for retail companies which have suffered a decrease in their sales of less than 7 per cent, but experienced positive sales growth in the previous period. The suggestion would seem to be that competition leads to greater aggression and the contemporary real options theory bears this out. Research limitations/implications This study only uses data from retail companies listed on stock exchanges in Singapore, Indonesia and Malaysia. Practical implications The type of industry, the extent of the competition and the corporate strategy employed might influence the extent of cost stickiness. Therefore, the users of financial statements need to understand these factors. Originality/value While previous studies incorporated a variety of industries, this paper focuses on examining cost behaviour amid the competitive pressure from recent phenomena in the retail industry. The study provides empirical evidence for supporting the contemporary real options theory. When an industry experiences competition, investing in an uncertain situation will add value to a company, even if it causes sticky cost behaviour. This result contributes to the literature on cost behaviour and strategy management.

ABSTRACT

This study aims to examine whether managerial optimism and profit-based incentives affect cost behavior asymmetry, especially cost stickiness. Differ from previous literature on cost stickiness, the researchers use an experimental 2 × 2 betweenwithin subjects factorial design. This design allows us to use data related to cost management specifically, not just in general term as in studies using archival data from public financial statements. Our study results reaffirm cost stickiness literature. This study focuses on experiments among accounting students who are not knowledgeable about cost behavior asymmetry. Even though our 71 student participants know only the symmetric cost behavior theory, when presented with a scenario related to sales prospects and information on profit-based incentives, the results of this study show otherwise. When participants are more optimistic and profit-based incentives have been achieved, the level of cost stickiness is also higher.

The purpose of this study is to provide empirical evidence about the effect of debt policy on the company’s value where the size of the company as a moderating variable. This study was performed on companies listed in Indonesia Stock Exchange in 2012-2015. The total sample of 88 companies with a total number of observations as much as 352 observations. The analysis technique used is the moderated regression analysis (MRA). The company's value in this study is proxied by the price book value (PBV), while the debt policy is proxied by debt to equity ratio (DER), and the size of the company is proxied by the natural logarithm of total assets. Based on the analysis found that the debt policy significant positive effect on the value of the company, which weakens the relationship between the size of the company's debt policy on the value of the company.