IDEAS home Printed from https://ideas.repec.org/a/jfr/ijfr11/v11y2020i2p97-110.html
   My bibliography  Save this article

Attainment Discrepancy Level, Firm Resources Slack, and Sticky Cost

Author

Listed:
  • Riha Dedi Priantana
  • Abdul Rohman
  • Fuad

Abstract

The aim of this study is to further develop the behavioral theory of the firm into the context of sticky cost research. The company¡¯s actions in managing resources can be explained through the concept of attainment discrepancy level and resource slack in the behavioral theory of the firm explaining the company¡¯s sticky costs. This study also examines the effect of attainment discrepancy levels, both historical and social, on cost behavior between slack dimensions and overall slack. To examine it, this study used 2,416 observations data from 302 companies listed on the Indonesian Stock Exchange during 2009-2017. Using Eviews 10, the estimation results of the regression model based on HAC find that the attainment of discrepancy level and resource slack affects sticky costs. Specifically, this study found that historical attainment discrepancy level causes sticky cost behavior to decrease, whereas social attainment discrepancy level increases cost behavior to become more sticky cost. The effect of resource slack on sticky cost behavior is reduced, both for each slack dimension and for the overall slack. Furthermore, the results show that the existence of certain types of slack, namely unabsorbed slack, increases the company¡¯s sticky cost behavior when it is associated with historical attainment discrepancy levels. To sum up, these results indicate that the firm makes internal business processes as the focus of attention in managing the company¡¯s resources. As a consequence, this situation can be used as an alternative explanation for the company¡¯s asymmetric cost behavior.

Suggested Citation

  • Riha Dedi Priantana & Abdul Rohman & Fuad, 2020. "Attainment Discrepancy Level, Firm Resources Slack, and Sticky Cost," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 11(2), pages 97-110, April.
    • Handle: RePEc:jfr:ijfr11:v:11:y:2020:i:2:p:97-110
    DOI: 10.5430/ijfr.v11n2p97
    as

    Download full text from publisher

    File URL: http://www.sciedu.ca/journal/index.php/ijfr/article/view/16427/10796
    Download Restriction: no
    File URL: http://www.sciedu.ca/journal/index.php/ijfr/article/view/16427
    Download Restriction: no
    File URL: https://libkey.io/10.5430/ijfr.v11n2p97?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Ying Zhang & Ji Li & Wanxing Jiang & Haomin Zhang & Yanghong Hu & Min Liu, 2018. "Organizational structure, slack resources and sustainable corporate socially responsible performance," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 25(6), pages 1099-1107, November.
    2. Yiru Yang, 2019. "Do Accruals Earnings Management Constraints and Intellectual Capital Efficiency Trigger Asymmetric Cost Behaviour? Evidence from Australia," Australian Accounting Review, CPA Australia, vol. 29(1), pages 177-192, March.
    3. Joonhei Cheung & Hyunpyo Kim & Seungjun Kim & Rong Huang, 2018. "Is the asymmetric cost behavior affected by competition factors?," Asia-Pacific Journal of Accounting & Economics, Taylor & Francis Journals, vol. 25(1-2), pages 218-234, January.
    4. Itay Kama & Dan Weiss, 2013. "Do Earnings Targets and Managerial Incentives Affect Sticky Costs?," Journal of Accounting Research, Wiley Blackwell, vol. 51(1), pages 201-224, March.
    5. Mark C. Anderson & Rajiv D. Banker & Surya N. Janakiraman, 2003. "Are Selling, General, and Administrative Costs “Sticky”?," Journal of Accounting Research, Wiley Blackwell, vol. 41(1), pages 47-63, March.
    6. Kitching, Karen & Mashruwala, Raj & Pevzner, Mikhail, 2016. "Culture and Cost Stickiness: A Cross-country Study," The International Journal of Accounting, Elsevier, vol. 51(3), pages 402-417.
    7. Sandra Cohen & Sotirios Karatzimas & Vassilios-Christos Naoum, 2017. "The sticky cost phenomenon at the local government level: empirical evidence from Greece," Journal of Applied Accounting Research, Emerald Group Publishing Limited, vol. 18(4), pages 445-463, November.
    8. Beverly B. Tyler & Turanay Caner, 2016. "New product introductions below aspirations, slack and R&D alliances: A behavioral perspective," Strategic Management Journal, Wiley Blackwell, vol. 37(5), pages 896-910, May.
    9. Szymon Kaczmarek, 2017. "Rethinking board diversity with the behavioural theory of corporate governance: opportunities and challenges for advances in theorising," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 21(4), pages 879-906, December.
    10. Shipeng Han & Zabihollah Rezaee & Ling Tuo, 2019. "Is cost stickiness associated with management earnings forecasts?," Asian Review of Accounting, Emerald Group Publishing Limited, vol. 28(2), pages 173-211, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ibrahim, Awad Elsayed Awad & Ali, Hesham & Aboelkheir, Heba, 2022. "Cost stickiness: A systematic literature review of 27 years of research and a future research agenda," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 46(C).
    2. Cristiana Cattaneo & Gaia Bassani, 2020. "Sticky costs: le determinanti e le sfide per manager e accademici," MANAGEMENT CONTROL, FrancoAngeli Editore, vol. 2020(Suppl. 1), pages 103-126.
    3. Komang Ayu Krisnadewi & Noorlailie Soewarno, 2021. "Optimism and profit-based incentives in cost stickiness: an experimental study," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 32(1), pages 7-31, March.
    4. Wei Huang & Jaehyeon Kim, 2020. "Linguistically Induced Time Perception and Asymmetric Cost Behavior," Management International Review, Springer, vol. 60(5), pages 755-785, October.
    5. Mabel D. Costa & Ahsan Habib, 2021. "Trade credit and cost stickiness," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 61(1), pages 1139-1179, March.
    6. James N Cannon & Bingbing Hu & Jay Junghun Lee & Daoguang Yang, 2020. "The effect of international takeover laws on corporate resource adjustments: Market discipline and/or managerial myopia?," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(9), pages 1443-1477, December.
    7. Lijun Ma & Xin Wang & Che Zhang, 2021. "Does Religion Shape Corporate Cost Behavior?," Journal of Business Ethics, Springer, vol. 170(4), pages 835-855, May.
    8. Christian Riegler & Katrin Weiskirchner-Merten, 2021. "Research note: an analytical perspective on market decisions and asymmetric cost behavior," Review of Managerial Science, Springer, vol. 15(4), pages 991-1005, May.
    9. Costa, Mabel D’ & Opare, Solomon, 2022. "Cost asymmetry around seasoned equity offerings," Journal of Behavioral and Experimental Finance, Elsevier, vol. 34(C).
    10. Tingyong Zhong & Fangcheng Sun & Haiyan Zhou & Jeoung Yul Lee, 2020. "Business Strategy, State-Owned Equity and Cost Stickiness: Evidence from Chinese Firms," Sustainability, MDPI, vol. 12(5), pages 1-21, March.
    11. Thomas Guenther & Anja Riehl & Richard Rößler, 2014. "Cost stickiness: state of the art of research and implications," Metrika: International Journal for Theoretical and Applied Statistics, Springer, vol. 24(4), pages 301-318, February.
    12. Thomas A. Gilliam, 2021. "Detecting Real Activities Manipulation: Beyond Performance Matching," Abacus, Accounting Foundation, University of Sydney, vol. 57(4), pages 619-653, December.
    13. Wulung Li & Ramachandran Natarajan & Yan Zhao & Kenneth Zheng, 2021. "The effect of management control mechanisms through risk-taking incentives on asymmetric cost behavior," Review of Quantitative Finance and Accounting, Springer, vol. 56(1), pages 219-243, January.
    14. Al Mabsali, Yousuf Khamis & Hayward, Robert & Eliwa, Yasser, 2021. "Managerial tools used to meet or beat analyst forecasts: Evidence from the UK," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 43(C).
    15. Ziyang Li & Qianwei Ying & Yuying Chen & Xuehui Zhang, 2020. "Managerial risk appetite and asymmetry cost behavior: evidence from China," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 60(5), pages 4651-4692, December.
    16. Shohei Nagasawa, 2018. "Asymmetric cost behavior in local public enterprises: exploring the public interest and striving for efficiency," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 29(3), pages 225-273, December.
    17. Xiaotao (Kelvin) Liu & Xiaoxia Liu & Colin D. Reid, 2019. "Stakeholder Orientations and Cost Management," Contemporary Accounting Research, John Wiley & Sons, vol. 36(1), pages 486-512, March.
    18. Martin Bugeja & Meiting Lu & Yaowen Shan, 2015. "Cost Stickiness in Australia: Characteristics and Determinants," Australian Accounting Review, CPA Australia, vol. 25(3), pages 248-261, September.
    19. Kerstin Lopatta & Thomas Kaspereit & Laura‐Maria Gastone, 2020. "Managerial style in cost asymmetry and shareholder value," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 41(5), pages 800-826, July.
    20. Thomas R. Loy & Sven Hartlieb, 2018. "Have estimates of cost stickiness changed across listing cohorts?," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 29(2), pages 161-181, August.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:jfr:ijfr11:v:11:y:2020:i:2:p:97-110. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Gina Perry (email available below). General contact details of provider: http://ijfr.sciedupress.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.