The Moderating Effect of the Main Bank System in Japan on the Association between Financial Risk and Cost Behavior

Kitada, Tomohisa; Koyama, Mami; Kajiwara, Takehisa

doi:10.2139/ssrn.2823246

Cited by 1 publication

(2 citation statements)

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“…These decisions will make cost structure more flexible which will lessen the further risk on one hand and influence cost behavior on the other hand (Holzhacker et al, 2015). Kitada et al (2016) suggest that financial risk may affect cost behavior by influencing the degree of managerial choices in resource adjustment decisions in two ways. First, increase in financial risk will lead to increase the firm's cost of capital.…”

Section: Financial Risk and Cost Stickinessmentioning

confidence: 99%

“…Firms with high level of financial risk do not have the ability to afford additional risks due to the inflexibility of their cost structure to interact with the changes in the activity level, which may lead these firms to be bankrupted (Holzhacker et al, 2015). According to Kitada et al(2016), financial risk may affect cost behavior by influencing the degree of managerial choices in resource adjustment decisions in two ways. First, increase in financial risk will lead to increase the firm's cost of capital.…”

Section: Introductionmentioning

confidence: 99%

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Financial Risk and Cost Stickiness: Evidence From Egypt

Mandour

2021

ijafr

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This study seeks to investigate whether the cost of goods sold (COGS) behaves asymmetric to change in sales, and examines the effect of financial risk on asymmetric cost behavior of COGS in the Egyptian manufacturing firms. The financial data of this study were collected from the published annual reports for a sample of 65 Egyptian listed manufacturing firms during the period (2006-2015) with total observations 530 firm-year. The analysis of this paper is based on Anderson et al.’s (2003) cost stickiness model. The findings indicate that the COGS is sticky to change in sales, it rises more when sales increase than when it falls for equivalent sales decrease and the degree of cost stickiness increases with a firm’s financial risk. This study is the first attempt to examine the direct effect of financial risk on the COGS behavior using Altman Z-score model as a proxy for financial risk, which may affect the accuracy of the results. By focusing on this proxy, the study identifies a significant relationship, which was not adequately addressed in previous studies. Therefore, this study extends the cost behavior literature by examining the impact of financial risk on managers' decisions to amend the resources.

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Section: Financial Risk and Cost Stickinessmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%