Cost stickiness: An empirical study on the existence of asymmetrical cost behavior of publicly listed companies in the Philippines

• Main Authors: Aco, Bernadette Liza F., Co, Hazel Ann C., Kua, Joan G.
• Format: text
• Language: English
• Published: Animo Repository 2009
• Subjects: Cost accounting; Managerial accounting; Financial risk management; Accounting
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/10572
• Institution: De La Salle University

The study utilized Anderson, Banker, and Janakiraman's (2003) basic model to test for the existence of asymmetrical behavior in SG&A costs for a sample of 74 Philippine publicly-listed companies over a 9-year period. The findings suggested that a 1% increase in revenue leads only to 0.3891% decrease in costs, thus demonstrating the existence of asymmetrical cost behavior. Variations revealed that cost stickiness is not reversed in subsequent periods and it is less pronounced when revenue declined in the preceding period. Empirical evidence showed that the degree of stickiness is greater during periods of economic growth and does not increase with the asset-and employee-intensity of the company. Lastly, stickiness is only exhibited for absolute revenue changes over 60%.