Cost Stickiness, Firm Value, and the Effect of Managerial Ability
2
조회
0
다운로드
2
인용
0
참고문헌
키워드
초록
[Purpose] This paper intends to identify the effect of cost stickiness on firm value depending on firm specific adjustment cost and analyze how managerial ability affects the relation between cost stickiness and firm value. Although cost stickiness is an essential part of a firm's business strategies, the association of cost stickiness and the firm value are nearly unknown. Thus, this study shows that the cost stickiness differently affects firm value depending on the firm characteristics. [Methodology] The sample consists of companies for which financial data are available among U.S. listed companies between 1998 and 2018. Using the cost stickiness measure by Weiss (2010), we test whether cost stickiness is associated with a firm value(Tobin’s Q) and whether this relation is affected by managerial ability measured by Demerjian et al. (2012) model. [Findings] We find that there is a significant negative relationship between cost stickiness and firm value only in the lowest adjustment cost group. This result indicates that firm value with a low level of adjustment cost decrease as the cost stickiness increases because this cost stickiness occurs from an agency problem. But for the firms with high adjustment costs, the two motivations, adjustment cost, and agency problem, are mixed for the cost stickiness. Furthermore, if firms’ managers have high abilities, the managerial ability mitigates the negative relation between firm value and cost stickiness. [Implications] This study has contributed to the empirical analysis of the effect of managerial deliberate cost behavior on firm value. In addition, by using managerial ability measures by Demerjian et al. (2012), we show that managerial characteristics can affect firm value through the cost behavior strategy. Furthermore, we try to identify whether cost stickiness primarily reflects rational resource management or an agency problem and study how observed cost stickiness affects the firm value.
Abstract
[Purpose] This paper intends to identify the effect of cost stickiness on firm value depending on firm specific adjustment cost and analyze how managerial ability affects the relation between cost stickiness and firm value. Although cost stickiness is an essential part of a firm's business strategies, the association of cost stickiness and the firm value are nearly unknown. Thus, this study shows that the cost stickiness differently affects firm value depending on the firm characteristics. [Methodology] The sample consists of companies for which financial data are available among U.S. listed companies between 1998 and 2018. Using the cost stickiness measure by Weiss (2010), we test whether cost stickiness is associated with a firm value(Tobin’s Q) and whether this relation is affected by managerial ability measured by Demerjian et al. (2012) model. [Findings] We find that there is a significant negative relationship between cost stickiness and firm value only in the lowest adjustment cost group. This result indicates that firm value with a low level of adjustment cost decrease as the cost stickiness increases because this cost stickiness occurs from an agency problem. But for the firms with high adjustment costs, the two motivations, adjustment cost, and agency problem, are mixed for the cost stickiness. Furthermore, if firms’ managers have high abilities, the managerial ability mitigates the negative relation between firm value and cost stickiness. [Implications] This study has contributed to the empirical analysis of the effect of managerial deliberate cost behavior on firm value. In addition, by using managerial ability measures by Demerjian et al. (2012), we show that managerial characteristics can affect firm value through the cost behavior strategy. Furthermore, we try to identify whether cost stickiness primarily reflects rational resource management or an agency problem and study how observed cost stickiness affects the firm value.
참고문헌 (19)
- Anderson, M. C., "Are Selling, General, and Administrative Costs"Sticky"?", Journal of Accounting Research, 41(1), pp.47~63 (2003)
- Anderson, M., "Cost behavior and fundamental analysis of SG&A costs", Journal of Accounting, Auditing & Finance, 22(1), pp.1~28 (2007)
- Balakrishnan, R., "Cost stickiness and core competency : A note", Contemporary Accounting Research, 25(4), pp.993~1006 (2008)
- Balakrishnan, R., "Does capacity utilization affect the"stickiness"of cost?", Journal of Accounting, Auditing & Finance, 19(3), pp.283~300 (2004)
- Banker, R. D., "Asymmetric cost behavior", Journal of Management Accounting Research, 26(2), pp.43~79 (2014)
- Banker, R. D., "Employment protection legislation, adjustment costs and cross－country differences in cost behavior", Journal of Accounting & Economics, 55(1), pp.111~127 (2013)
- Banker, R. D., "Predicting earnings using a model based on cost variability and cost stickiness", The Accounting Review, 81(2), pp.285~307 (2006)
- Banker, R. D., "The moderating effect of prior sales changes on asymmetric cost behavior", Journal of Management Accounting Research, 26(2), pp.221~242 (2014)
- Banker, R. D., "Cost management research", Journal of Management Accounting Research, 30(3), pp.187~209 (2018)
- Bebchuk, L. A., "The CEO pay slice", Journal of financial Economics, 102(1), pp.199~221 (2011)
- Chen, C. X., "The agency problem, corporate governance, and the asymmetrical behavior of selling, general, and administrative costs", Contemporary Accounting Research, 29(1), pp.252~282 (2012)
- Chen, J. V., "A contextual analysis of the impact of managerial expectations on asymmetric cost behavior", Review of Accounting Studies, 24(2), pp.665~693 (2019)
- Demerjian, P., "Quantifying managerial ability : A new measure and validity tests", Management science, 58(7), pp.1229~1248 (2012)
- Dierynck, B., "Do managerial incentives drive cost behavior? Evidence about the role of the zero earnings benchmark for labor cost behavior in private Belgian firms", The Accounting Review, 87(4), pp.1219~1246 (2012)
- Kama, I., "Do earnings targets and managerial incentives affect sticky costs?", Journal of Accounting Research, 51(1), pp.201~224 (2013)
- 김새로나, "경영자능력이 원가비대칭성에 미치는 영향에 관한 연구", 기업경영연구, 28(2), pp.1~27 (2021), 한국기업경영학회
- McShane, M. K., "Does enterprise risk management increase firm value?", Journal of Accounting, Auditing & Finance, 26(4), pp.641~658 (2011)
- Qin, B., "CEO overconfidence and cost stickiness", Management Control & Accounting, 2015(2), pp.34~38 (2015)
- Weiss, D., "Cost behavior and analysts' earnings forecasts", The Accounting Review, 85(4), pp.1441~1471 (2010)