Author URLs
Document Type
Article
Publication Date
6-2020
Subject: LCSH
Cost accounting, Management--Decision making, Management--Moral and ethical aspects
Disciplines
Accounting
Abstract
Asymmetric cost behavior or cost stickiness is a relatively new phenomenon in accounting. Cost accounting initially assumed that traditional cost behaviors follow a symmetrical pattern, whereas sales and costs rise and fall equivalently with each other. Extending the research of Anderson, Banker and Janakiraman (2003) which introduced a theory that contradicted the normal symmetrical cost behavior by suggesting that internal factors, such as management decisions impact spending resulting in asymmetric cost behavior or cost stickiness. The objective of this paper is to explore whether asymmetric cost behavior or cost stickiness impacts corporate earnings of enterprises and if so, does this inadvertently create ethical issues for decision-making by management, as they may benefit in compensation from these decisions. By examining the link between Sales General and Administrative expenses (SG&A) and earnings, this paper shows how asymmetrical behavior influences management decision making cost. The conclusions, recommendations and implications reached in this study are generalizable and appropriate for use in developing best practices.
DOI
https://doi.org/10.15640/smq.v8n2a1
Repository Citation
Flannery, Kelly and Mohs, James, "Asymmetric Cost Behavior: Exploring Ethical Issues Facing Management" (2020). Accounting Faculty Publications. 7.
https://digitalcommons.newhaven.edu/accounting-facpubs/7
Comments
Copyright ©The Author(s). All Rights Reserved.
This article is published in Strategic Management Quarterly, volume 8, no. 2 (June 2020).