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Cost stickiness during the financial crisis: rational resource management or wasteful overspending?
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Business Studies.
2017 (English)Independent thesis Advanced level (degree of Master (Two Years)), 20 credits / 30 HE creditsStudent thesis
Abstract [en]

Purpose: The purpose of this paper is to advance the understanding of the relationship between asymmetric cost behavior in the recent global financial crisis of 2008/09 and long-term firm performance. We evaluate managerial decision making on cost behavior to a certain degree, based on whether cost stickiness during the financial crisis was value creating or value diminishing in the long run.

Design/Methodology/Approach: We apply a linear regression model to a sample of 675 U.S. based firms. We proxy cost stickiness through changes in COGS in relation to sales and use a market (Total Shareholder Return) as well as an aggregated accounting based measure (ROA) to proxy for long-term firm performance.

Findings: Sticky costs are negatively correlated to firm performance. The market-based model is significant on a 1% level and the accounting based model is significant on a 10% level.

Originality/Value: No paper, to our knowledge, has conducted a direct analysis between cost stickiness during the financial crisis and long-term firm performance. We contribute directly to the “good” or “bad” discussion of sticky costs.

Keywords: Cost behavior research, asymmetric cost behavior, long-term firm perfor-mance, management controlling, agency theory, resource-based viewPaper type: Master’s Thesis

Place, publisher, year, edition, pages
2017. , 54 p.
National Category
Business Administration
Identifiers
URN: urn:nbn:se:uu:diva-325513OAI: oai:DiVA.org:uu-325513DiVA: diva2:1114958
Subject / course
Business Studies
Educational program
Master Programme in Business and Management
Available from: 2017-06-26 Created: 2017-06-26 Last updated: 2017-06-26Bibliographically approved

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Citation style
  • apa
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Language
  • de-DE
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Output format
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