Additional Evidence on the Sticky Behavior of Costs

Subramaniam, Chandrasekar; Watson, Marcia Weidenmier

doi:10.1108/s1474-787120150000026006

Cited by 67 publications

(90 citation statements)

References 23 publications

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“…First, it has long been known that understanding firms' cost behavior is crucial for the prediction of expenses and forecasting earnings (Penman [2009], Subramanyam and Wild [2008], Sloan and Lundholm [2010]). Yet, our results suggest that analysts utilize information on cost variability and cost stickiness with a systematic error, which, in turn, introduces a large earnings forecast error when sales miss expectations and a small earnings forecast error when sales beat expectations by an equivalent amount.…”

Section: Introductionmentioning

confidence: 99%

Implications of Cost Behavior for Analysts' Earnings Forecasts

Ciftci

Mashruwala

Weiss

2015

Journal of Management Accounting Research

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Recent work in management accounting offers several novel insights into firms' cost behavior. This study explores whether financial analysts appropriately incorporate information on two types of cost behavior in predicting earnings—cost variability and cost stickiness. Since analysts' utilization of information is not directly observable, we model the process of earnings prediction to generate empirically testable hypotheses. The results indicate that analysts “converge to the average” in recognizing both cost variability and cost stickiness, resulting in substantial and systematic earnings forecast errors. Particularly, we find a clear pattern—inappropriate incorporation of available information on cost behavior in earnings forecasts leads to larger errors in unfavorable scenarios than in favorable ones. Overall, enhancing analysts' awareness of the expense side is likely to improve their earnings forecasts, mainly when sales turn to the worse. JEL Classifications: M41; M46; G12.

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Section: Introductionmentioning

confidence: 99%

Implications of Cost Behavior for Analysts' Earnings Forecasts

Ciftci

Mashruwala

Weiss

2015

Journal of Management Accounting Research

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“…Anderson et al [3] find that the size of the change in current cost of goods sold (CGS) is also smaller for decreases versus increases in sales. Subramanian et al [4] extend this study and determine that the observed asymmetric adjustment of current SGA and current CGS only holds for large changes in current sales revenues. Balakrishnan et al [5] employ private data from physical therapy clinics to show that stickiness is influenced by the extent to which capacity constraints bind, whereas Balakrishnan et al [6], using department-level data from hospitals, find that cost stickiness is more strongly observable with respect to an organization's core competency.…”

Section: Introductionmentioning

confidence: 79%

Model Misspecification in the Sticky Cost Literature

Coyne¹

2016

International JAR

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Beginning with Anderson et al., multiple studies have used a common model to investigate "sticky costs." This model regresses the log change in SG&A on the log change in revenues. However, Balakrishnan et al. assert that the finding of sticky costs is the result of model misspecification, and using an alternative model that regresses the change in costs scaled by lagged revenues on the changes in revenues scaled by lagged revenues, they find no evidence of sticky costs. I assert that their model also suffers from misspecification, and I propose a new model for measuring sticky costs that addresses misspecification in both prior models. Using this model, I again find evidence of sticky costs.

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“…Com base nisso, é razoável supor que, quando a receita subir, os custos também serão geridos de forma mais cautelosa e eficiente para atender à nova demanda, conforme encontrado neste estudo para empresas dos países do PIIGS. Por fim, salienta-se ainda que, apesar de algumas similaridades encontradas entre os setores, de fato, o comportamento assimétrico dos custos depende do setor de atuação das empresas (Richartz e Borgert, 2014), pois cada atividade possui demandas diversificadas de inventário, imóveis, instalações e equipamentos, custos de trabalho (mão de obra), bem como índices operacionais diferenciados (Subramaniam e Watson, 2016), fazendo com que o comportamento dos custos seja diferente entre os setores estudados e, assim, aceitando a hipótese 3 desta pesquisa.…”

Section: Comportamento Dos Custosunclassified

“…Posteriormente, outros autores testaram o referido modelo alternativo, que passou a ser mais amplamente chamado de sticky costs em contextos econômicos diversificados. Assim, seguindo o estudo seminal de Anderson et al (2003), os pesquisadores Subramaniam e Watson (2016) analisaram o comportamento dos custos no cenário norteamericano, adicionando a magnitude da variação das receitas, os setores das organizações estudadas, entre outros fatores na análise. Medeiros, Costa e Silva (2005) testaram os sticky costs em empresas brasileiras, tendo como diferencial a realização desse estudo em país com economia mais instável e que, por este motivo, pode afetar o comportamento dos custos.…”

Section: Introductionunclassified

Fatores associados ao comportamento dos custos em períodos de prosperidade e crise econômica em empresas dos países que compõe o PIIGS

2018

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O objetivo deste estudo é investigar fatores associados ao comportamento dos custos em períodos de prosperidade e crise econômica de 473 empresas dos países que compõem o PIIGS. Foi realizada uma pesquisa descritiva, com análise documental e abordagem quantitativa entre os anos de 1998 e 2015. Os resultados demonstram que as organizações operam com margens de lucro inferior nos períodos de crise, sugerindo que estas tendem a ajustar suas estruturas de custo para resistir aos períodos de crise. Ademais, os custos (despesas) com vendas, gerais e administrativos apresentam menor assimetria na recessão enquanto fluxo de caixa livre e intensidade dos ativos fixos aumentam a assimetria. Esta pesquisa fornece novas perspectivas para que gestores identifiquem possíveis caminhos para a tomada de decisão mais assertiva, visando manter a persistência das organizações no mercado.

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Additional Evidence on the Sticky Behavior of Costs

Cited by 67 publications

References 23 publications

Implications of Cost Behavior for Analysts' Earnings Forecasts

Implications of Cost Behavior for Analysts' Earnings Forecasts

Model Misspecification in the Sticky Cost Literature

Fatores associados ao comportamento dos custos em períodos de prosperidade e crise econômica em empresas dos países que compõe o PIIGS

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