원가행태의 비대칭성에 관한 연구

Abstract

A Study on the Asymmetry of Cost Behavior

by Gye Seon, Jo Advisor: Prof. Kim Seung-Young, Ph.D Department of Accounting Graduate School, Chosun University

In the conventional model of cost behavior generally accepted in the accounting literature, costs are taken as fixed or variable with respect to changes in activity level. In this model, variable costs vary proportionately with changes in the activity volume. However, some authors have sustained costs rise more with increases in activity volume than they fall with decreases. This kind of cost behavior is called "sticky costs”, costs are sticky if the magnitude of the increase in costs associated with an increase in volume is greater than the magnitude of the decrease in costs associated with an equivalent decrease in volume. The prevalence of sticky costs is consistent with an alternative model of cost behavior in which managers deliberately adjust resources in response to changes in volume. This model distinguishes between costs that move mechanistically with changes in volume and costs that are determined by the resources committed by managers. When there is uncertainty about future demand and firms must incur adjustment costs to reduce or restore committed resources, managers may purportedly delay reductions to committed resources until they are more certain about the permanence of a decline in demand. This suggests that stickiness observed in one period may reverse in a subsequent period and that stickiness may be less pronounced when the observation period is longer. The reason for this relevance consists in the fact that the basis of many managerial decisions is the knowledge of how costs can change as a function of activity level. This study adopts the assumption that cost behavior depends on the intensity and direction of the variation in the activity driver. The question we try to answer is: are the costs of Brazilian firms sticky? Sticky costs in this study mean a more intense (positive) cost response when revenues increase than a (negative) cost response when revenues decrease in the same proportion. Therefore, the paper’'s main purpose is to identify how costs behave with respect to changes in net revenues in Korean firms. The paper is divided in five sections. In the following section, a literature review on cost behavior including published works on the existence of cost stickiness is presented. The third section describes the hypotheses to be tested and the methodology used in the study. The fourth section describes the econometric models utilized are presented and the empirical results obtained. The last section presents the conclusions.