Intra-industry benchmarking of SG&A expenses: A neo-institutional perspective

Walter Aerts and Tom van Caneghem

Working Papers from University of Antwerp, Faculty of Business and Economics

Abstract: In this paper we study conformity tendencies in SG&A (Selling, General and Administrative expenses) reporting from a mimetic imitation perspective. We explore intra-industry conformity tendencies in reported SG&A relative to sales over a ten-year period among a sample of US firms. We measure conformity by comparing a firm’s SG&A profile against a reference group of industry model firms. Results suggest that a firm’s imitation of successful firms’ SG&A profiles is determined by the tendency of other industry members to imitate those reference models. Moreover, results suggest that the mimetic process is strengthened with higher environmental uncertainty and that large auditor networks function as facilitators for this type of socially-based imitation behavior. Different modes of trait imitation in SG&A reporting seem to coexist as long as the reference groups are defined in terms of size and profitability.

Keywords: SG&A reporting; Overhead costs; Neo-institutional theory; Cost allocation; Imitation behavior (search for similar items in EconPapers)
Pages: 51 pages
Date: 2006-12
New Economics Papers: this item is included in nep-cse
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Persistent link: https://EconPapers.repec.org/RePEc:ant:wpaper:2006032

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