Board characteristics and asymmetric cost behavior: evidence from Egypt

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    This study aims to provide further evidence on asymmetric cost behavior (cost stickiness) from one of the emerging economies, Egypt. The study provides also empirical evidence on the potential impact of corporate governance on nature and extent of asymmetric cost behavior. The study estimates three multiple regression models using Ordinary Least Squares (OLS) to examine the behavior of Cost of Goods Sold (COGS) and the influence of board characteristics and other control variables in a sample of 80 listed companies during 2008-2013.
    The analysis provides evidence on COGS asymmetric behavior, where the analysis finds that COGS increase by 1.05 %, but decrease by 0.85% for an equivalent activity change of 1%, which contradicts the traditional cost model assumption that costs behave linearly. In addition, the analysis finds that firm-year observations with larger boards, role duality, and higher non-executives ratio exhibit greater cost asymmetry than others do while firms-years with successive sales decrease, higher economic growth and institutional ownership found to exhibit lower cost stickiness. This study contributes by providing evidence on asymmetric cost behavior from one of emerging economies. Further, the study extends the very few studies on the relationship between corporate governance and asymmetric cost behavior. In addition, the study contributes by examining a different cost type (COGS) that found to be
    examined by very few studies. Finally, the study provides an evaluation of the 2007 Egyptian Corporate Governance Code, from the cost behavior context.
    Original languageEnglish
    Pages (from-to)301-322
    Number of pages22
    JournalAccounting Research Journal
    Issue number2
    Publication statusPublished - 30 Jun 2017


    • Corporate Governance
    • cost asymmetry
    • cost stickiness
    • Egypt


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