Date of Publication
3-25-2024
Document Type
Master's Thesis
Degree Name
Master of Science in Accountancy
Subject Categories
Accounting
College
Ramon V. Del Rosario College of Business
Department/Unit
Accountancy
Thesis Advisor
Jonathan P. Binaluyo
Defense Panel Chair
Janus Aries Q. Simbillo
Defense Panel Member
Van Japheth M. Ancla
Aristotle Manuel D. Go
Abstract/Summary
In theory, management accountants view cost behavior as linear with the level of activity and the change is symmetrical between increases and decreases. However, contemporary studies suggest that cost behaves asymmetrically between increases and decreases. For instance, Anderson, Banker and Janakiraman (2003) found that selling, general and administrative (SG&A) cost among US firms increases by 0.550% per 1% increase in sales, however, it only decreases by 0.350% per 1% decrease in sales. This phenomenon has been known as cost stickiness where the magnitude of decrease in cost per unit decrease in level of activity is not as much as its magnitude of increase per unit increase in level of activity. On the other hand, Abu-Serdaneh (2014) discovered that direct cost, or also known as cost of goods sold (COGS), and SG&A cost among Jordanian firms increase by 0.74% and 0,52%, respectively, per 1% increase in sales, but decrease by 0.92% and 0.84%, respectively, per 1% decrease in sales. This phenomenon is referred to as “anti-sticky” behavior, which is the opposite of “sticky”, indicating that the magnitude of decrease in cost upon revenue decline is greater than its increase upon revenue increase.
This study adopted the same model used by existing literature to identify whether asymmetric behavior exists among publicly listed nonfinancial firms in the Philippines and identify which industry/ies exhibit/s such behavior. Using the Ordinary Least Square (OLS) estimation, there was strong statistical evidence that operating cost among firms in the real estate and construction sector exhibit sticky behavior. Furthermore, there was also weak evidence that suggests firms in the food and beverage production, and mining sectors exhibit sticky behavior. Moreover, the cost stickiness among firms in the real estate and construction, and mining sectors were temporary as it was expected to reverse in subsequent periods. Finally, there was a possible indicator that there is a delay between the decision and realization of change as it takes time to effect changes in costs among firms in the food and beverage production sector.
Abstract Format
html
Language
English
Format
Electronic
Keywords
Cost accounting
Recommended Citation
Corpuz, A. (2024). An empirical analysis on the evidence of the asymmetric behavior of cost among nonfinancial publicly listed firms in the Philippines. Retrieved from https://animorepository.dlsu.edu.ph/etdm_acc/12
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Embargo Period
7-13-2024
