||In this study, we examined the relationship between the differentiation strategy and cost asymmetry. The choice of strategy is closely related to firm’s operating. In this study, we assumed that the differentiation strategy will affect the manager’s decisions on resource adjustment cost. That means the differentiation strategy firm choose will affect the cost asymmetry.|
Using listed on TSE, OTC, and Emerging-Market companies in Taiwan from 1987 to 2013 as the research sample, we use differentiation strategy as our main strategy choice. The empirical results show that when firms have higher degree of differentiation strategy, they will exhibit greater cost stickiness. Furthermore, the relationship between the differentiation strategy and cost asymmetry also are moderated by the optimistic or pessimistic expectation of managers for future. The empirical result shows that under an optimistic scenario, firms with higher degree of differentiation strategy will exhibit greater cost stickiness. Conversely, under the pessimistic scenario, firms with higher degree of differentiation strategy will exhibit smaller cost anti-stickiness.
Anderson, M. C., R. D.Banker, and S. N.Janakiraman, 2003. Are selling, general, and administrative costs “sticky”? Journal of Accounting Research41(1): 47-63.
Balakrishnan, R., M. J.Petersen, and N. S.Soderstrom, 2004. Does capacity utilization affect the “stickiness” of cost?. Journal of Accounting, Auditing & Finance, 19(3): 283-300.
Balakrishnan, R., and T.S.Gruca.2008. Cost stickiness and core competency: A note. Contemporary Accounting Research25(4): 993-1006.
Banker, R. D., M. R.Ciftci, and R.Mashruwala, 2008. The effect of prior-period changes on cost behavior. Working Paper, Temple University, The University of Texas at Dallas.
Banker, R. D., D.Byzalov, M.Ciftci, and R.Mashruwala.2014. The moderating effect of prior sales changes on asymmetric cost behavior. Journal of Management Accounting Research 26(2): 221-242.
Banker, R. D., and D.Byzalov.2014. Asymmetric cost behavior. Journal of Management Accounting Research, 26(2): 43-79.
Banker, R. D., R.Flasher, and D.Zhang. 2014. Strategic positioning and asymmetric cost behavior. American Accounting Association.
Bentley, K. A., T. C.Omer, and N.Y.Sharp. 2013. Business strategy, financial reporting irregularities, and audit effort. Contemporary Accounting Research 30(2): 780-817.
Barney, J.B. 1991. Firm resources and sustained competitive advantage. Journal of Management 17(1): 99–120.
Calleja, K., M.Steliaros, and D. C.Thomas. 2006. A note on cost stickiness: Some international comparisons. Management Accounting Research 17(2): 127-140.
Kama, I., and D. Weiss. 2013. Do earnings targets and managerial incentives affect sticky costs? Journal of Accounting Research 51(1): 201-224.
Mintzberg, H. 1987. The strategy concept 1: five p′s for strategy. California management review 30(1):11-24.
Mintzberg, H. 1987. The Strategy Concept II: Another Look at Why Organizations Need Strategies. California management review 30(1):25-32.
Noreen, E., and N. Soderstrom.1997.The Accuracy of Proportional Cost Models: Evidence from Hospital Sevice Departments. Review of Accounting Studies 2: 89-114.
Peteraf, M. 1993. The Cornerstones of Competitive Advantage: A Resource-Based View. Strategic Management Journal 14(3): 179-191.
Porter, M. E. 1980. Competitive Strategy: Techniques for Analyzing Industries and Competitors, New York: Free Press.
Teece, D.J., G.Pisano, and A.Shuen. 1997. Dynamic Capabilities and Strategic Management. Strategic Management Journal18: 509-533.
Venieris, G., V. C.Naoum, and O.Vlismas. 2015. Organisation capital and sticky behaviour of selling, general and administrative expenses. Management Accounting Research 26:54-82.
Ward, P., and R.Duray. 2000. Manufacturing Strategy in Context: Environment, Competitive Strategy and Manufacturing Strategy. Journal of Operations Management 18(2):123-138.
White, R. 1986. Generic Business Strategies, Organizational Context and Performance: An Empirical Investigation. Strategic Management Journal 7(3): 217-231.
Williamson, O.E. 1979. Transaction-cost Economics: The Governance of Contractual Relations. Journal of Law and Economics 22: 233-261.
Weiss, D. 2010. Cost behavior and analysts’earnings forecasts. The Accounting Review 85(4):1441-1471.