Is the asymmetric cost behavior affected by competition factors?

Joonhei Cheung, Hyunpyo Kim, Seungjun Kim and Rong Huang

Asia-Pacific Journal of Accounting & Economics, 2018, vol. 25, issue 1-2, 218-234

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.

Date: 2018
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DOI: 10.1080/16081625.2016.1266271

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Asia-Pacific Journal of Accounting & Economics is currently edited by Yin-Wong Cheung, Hong Hwang, Jeong-Bon Kim, Shu-Hsing Li and Suresh Radhakrishnan

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