Does sticky cost represent a distortion of cost accounting principles? A critical view of ten divisive issues | ||
| مجلة المحاسبة والمراجعه لاتحاد الجامعات العربيه | ||
| Volume 12, Issue 2, August 2023, Pages 1-43 PDF (1.98 M) | ||
| DOI: 10.21608/naus.2023.310134 | ||
| Author | ||
| Rola Nowar | ||
| كلية التجارة -جامعة القاهرة | ||
| Abstract | ||
| Purpose: This paper arguably discusses the theory and reasoning of sticky cost across ten divisive issues covering the determinants, measurement and utility of cost stickiness classification. The paper shows that several neglected factors in literature impact the elasticity of cost groups such as cost behavior of cost items within cost groups in the short and long term, type of activity of business firms under study, production resources and selling price considerations, and absence of strategic management accounting techniques within business firms. Method: An empirical study posited that describing SG&A expenses behavior as sticky cost as a result of using financial variables, will not differ from the use of physical variables as explanatory variables of this stickiness. Financial and non-financial information for all EGX 100 is extracted from Egypt for Information Dissemination) EGID) for years 2016 to 2020. The final sample included 248 observations for 61 industrial firms. Anderson, Banker, and Janakiraman (2003) model is used in three regression equations to test the combined hypothesis of the research. Findings: Result of the statistical analysis reveals that pricing changes of revenue represent the main cause of cost stickiness behavior and replacing physical variables instead of financial variables may provide different results for many studies that addressed cost stickiness behavior. Originality: The paper develops suggestions of how future research should focus on aligning what is proposed by developed theories in accounting research with basics of accounting principles and the beneficial reflection of such theories in practice on business firms. The paper concludes that cost structure and control in addition to other factors impact the detection of short-term cost management decisions. | ||
| Keywords | ||
| SG&A expenses; sticky costs; asymmetric cost behavior; calculated risk; financial versus physical variables; decision making | ||
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