Sticky Cost Behavior: Theory and Evidence

Banker, Rajiv D.; Byzalov, Dmitri; Plehn-Dujowich, Jose M.

doi:10.2139/ssrn.1659493

Cited by 60 publications

(73 citation statements)

References 18 publications

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“…More specifically, no previous empirical research on cost stickiness focuses on this dilemma. Banker et al (2011a) support the premise that cost behaviour is driven by deliberate resource commitment decisions made by forward-looking managers. Some studies found association between firm's costs and future earnings per share (e.g.…”

Section: Introductionmentioning

confidence: 53%

“…We rely on the model used in the seminal study of Anderson et al (2003), as well as in most of the subsequent research on cost stickiness (e.g. Dalla and Perego, 2013;Banker et al, 2011a), and formulate the following equation:…”

Section: Methodsmentioning

confidence: 99%

“…Anderson et al, 2003;Calleja et al, 2006;Argilés-Bosch and García-Blandón, 2011;Dalla and Perego, 2014;Balakrisnan et al, 2014). On the other hand, other studies stress on the deliberate decisions of managers, depending on expectations (Cooper and Kaplan, 1992;Yasukata and Kawijara, 2011;, past sales growth (Anderson et al, 2013), the type of adjusted resources (Balakrishnan and Gruca, 2008), manager's building incentives (Chen et al, 2012), CEO compensation and expectations for value creation of input resource expenditures (Banker et al,. 2011a;Banker et al, 2011b), incentives to meet earnings targets (Kama and Weiss, 2013), changes in regulation (Balakrishnan et al, 2004;Holzhacker et al, 2015), capacity utilization (Cannon, 2014), demand uncertainty (Banker et al, 2013), etc.…”

Section: Introductionmentioning

confidence: 99%

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The influence of the trade-off between profitability and future increases in sales on cost stickiness

Argilés‐Bosch

García-Blandón

Ravenda

et al. 2017

Estudios de Economía

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show abstract

Section: Introductionmentioning

confidence: 53%

Section: Methodsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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The influence of the trade-off between profitability and future increases in sales on cost stickiness

Argilés‐Bosch

García-Blandón

Ravenda

et al. 2017

Estudios de Economía

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“…In particular, choices to cut resources made by self‐interested managers have recently drawn much attention. Banker, Huang, and Natarajan [2011] show a positive association between grants of equity incentives and increases in input resource spending when input resource expenditures create high future value. Their findings suggest that equity incentives influence managers’ decisions to adjust resources, but they do not explore the potential impact of equity incentives on the extent of cost asymmetry.…”

Section: Hypothesis Developmentmentioning

confidence: 91%

Do Earnings Targets and Managerial Incentives Affect Sticky Costs?

Kama

Weiss

2012

J of Accounting Research

332

271

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This study explores motivations underlying managers’ resource adjustments. We focus on the impact of incentives to meet earnings targets on resource adjustments and the ensuing cost structures. We find that, when managers face incentives to avoid losses or earnings decreases, or to meet financial analysts’ earnings forecasts, they expedite downward adjustment of slack resources for sales decreases. These deliberate decisions lessen the degree of cost stickiness rather than induce cost stickiness. The results suggest that efforts to understand determinants of firms’ cost structures should be made in light of the managers’ motivations, particularly agency‐driven incentives underlying resource adjustment decisions.

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“…The aforesaid studies show the existence of cost stickiness. According to previous studies, it is showed that the cost stickiness of enterprises mainly comes from three aspects: adjustment costs, managers' optimistic expectations and opportunistic behaviors (Banker et al, 2011) [3].…”

Section: Theoretical Analysis and Research Assumptionsmentioning

confidence: 99%

A Study on Chinese Labor Cost Stickiness

Tian¹,

Xiong²

2017

Proceedings of the 2017 International Conference on Education, Economics and Management Research (ICEEMR 2017)

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Abstract-By using the data of Chinese listed companies from 2008 to 2015,the labor cost stickiness of China is explored in this paper. By the study, it is found that there exists the labor cost stickiness in Chinese listed companies, and the degrees of labor cost stickiness have differences in the enterprises with different equity natures, and the labor cost stickiness of state-owned enterprises is significantly stronger than that of private enterprises. After the further introduction of capital intensity, it is found that the higher the degree of capital intensity is, the stronger the labor cost stickiness of enterprises is, and this phenomenon is more obvious in the state-owned enterprises.

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Sticky Cost Behavior: Theory and Evidence

Cited by 60 publications

References 18 publications

The influence of the trade-off between profitability and future increases in sales on cost stickiness

The influence of the trade-off between profitability and future increases in sales on cost stickiness

Do Earnings Targets and Managerial Incentives Affect Sticky Costs?

A Study on Chinese Labor Cost Stickiness

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