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Economic growth and cost stickiness: evidence from Egypt

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Economic growth and cost stickiness: evidence from Egypt. / Ibrahim, Awad.

In: Journal of Financial Reporting and Accounting, Vol. 13, No. 1, 01.06.2015, p. 119-140.

Research output: Contribution to journalArticle

Harvard

Ibrahim, A 2015, 'Economic growth and cost stickiness: evidence from Egypt', Journal of Financial Reporting and Accounting, vol. 13, no. 1, pp. 119-140. https://doi.org/10.1108/JFRA-06-2014-0052

APA

Ibrahim, A. (2015). Economic growth and cost stickiness: evidence from Egypt. Journal of Financial Reporting and Accounting, 13(1), 119-140. https://doi.org/10.1108/JFRA-06-2014-0052

Vancouver

Ibrahim A. Economic growth and cost stickiness: evidence from Egypt. Journal of Financial Reporting and Accounting. 2015 Jun 1;13(1):119-140. https://doi.org/10.1108/JFRA-06-2014-0052

Author

Ibrahim, Awad. / Economic growth and cost stickiness: evidence from Egypt. In: Journal of Financial Reporting and Accounting. 2015 ; Vol. 13, No. 1. pp. 119-140.

Bibtex

@article{1432b7e3acf6469bac5c4ec18036aefb,
title = "Economic growth and cost stickiness: evidence from Egypt",
abstract = "This paper aims to examine whether costs respond asymmetrically to demand change, and examine the influence of economic growth on cost stickiness, in the pre- and post-2008 financial crisis periods. This study uses multiple regression models to investigate the behavior of three costs: selling, general and administrative (SG&A), cost of goods sold (COGS) and operating costs (OCs) for the 2004-2011 period. Moreover, the study compares cost stickiness during the economic prosperity period (2006-2008) with cost stickiness during the economic recession period (2009-2011). The results reveal that SG&A increased by 0.38 per cent but decreased by 0.08 per cent, and COGS increased by 1.02 per cent but decreased by 0.57 per cent for a 1 per cent demand change, which proves cost stickiness. However, OC increased by 0.91 per cent, but decreased by 1.03 per cent for a 1 per cent demand change, which proves cost anti-stickiness. Moreover, SG&As were sticky during the prosperity period, but anti-sticky during the recession period. COGSs were sticky in both periods; however, the extent of cost stickiness is larger in the prosperity period. In contrast, OC were statistically insignificant in both periods. The results imply that managers should not use the same cost model all the time, as the economic growth fluctuations were found to affect the nature and extent of cost behavior. In addition, researchers should provide a modified cost model that considers the nonlinearity of correlation between costs and activity.",
keywords = "economic growth, management accounting, cost behaviour, cost stickiness",
author = "Awad Ibrahim",
year = "2015",
month = jun,
day = "1",
doi = "10.1108/JFRA-06-2014-0052",
language = "English",
volume = "13",
pages = "119--140",
journal = "Journal of Financial Reporting and Accounting",
issn = "1985-2517",
publisher = "Emerald Group Publishing Ltd.",
number = "1",

}

RIS

TY - JOUR

T1 - Economic growth and cost stickiness: evidence from Egypt

AU - Ibrahim, Awad

PY - 2015/6/1

Y1 - 2015/6/1

N2 - This paper aims to examine whether costs respond asymmetrically to demand change, and examine the influence of economic growth on cost stickiness, in the pre- and post-2008 financial crisis periods. This study uses multiple regression models to investigate the behavior of three costs: selling, general and administrative (SG&A), cost of goods sold (COGS) and operating costs (OCs) for the 2004-2011 period. Moreover, the study compares cost stickiness during the economic prosperity period (2006-2008) with cost stickiness during the economic recession period (2009-2011). The results reveal that SG&A increased by 0.38 per cent but decreased by 0.08 per cent, and COGS increased by 1.02 per cent but decreased by 0.57 per cent for a 1 per cent demand change, which proves cost stickiness. However, OC increased by 0.91 per cent, but decreased by 1.03 per cent for a 1 per cent demand change, which proves cost anti-stickiness. Moreover, SG&As were sticky during the prosperity period, but anti-sticky during the recession period. COGSs were sticky in both periods; however, the extent of cost stickiness is larger in the prosperity period. In contrast, OC were statistically insignificant in both periods. The results imply that managers should not use the same cost model all the time, as the economic growth fluctuations were found to affect the nature and extent of cost behavior. In addition, researchers should provide a modified cost model that considers the nonlinearity of correlation between costs and activity.

AB - This paper aims to examine whether costs respond asymmetrically to demand change, and examine the influence of economic growth on cost stickiness, in the pre- and post-2008 financial crisis periods. This study uses multiple regression models to investigate the behavior of three costs: selling, general and administrative (SG&A), cost of goods sold (COGS) and operating costs (OCs) for the 2004-2011 period. Moreover, the study compares cost stickiness during the economic prosperity period (2006-2008) with cost stickiness during the economic recession period (2009-2011). The results reveal that SG&A increased by 0.38 per cent but decreased by 0.08 per cent, and COGS increased by 1.02 per cent but decreased by 0.57 per cent for a 1 per cent demand change, which proves cost stickiness. However, OC increased by 0.91 per cent, but decreased by 1.03 per cent for a 1 per cent demand change, which proves cost anti-stickiness. Moreover, SG&As were sticky during the prosperity period, but anti-sticky during the recession period. COGSs were sticky in both periods; however, the extent of cost stickiness is larger in the prosperity period. In contrast, OC were statistically insignificant in both periods. The results imply that managers should not use the same cost model all the time, as the economic growth fluctuations were found to affect the nature and extent of cost behavior. In addition, researchers should provide a modified cost model that considers the nonlinearity of correlation between costs and activity.

KW - economic growth

KW - management accounting

KW - cost behaviour

KW - cost stickiness

U2 - 10.1108/JFRA-06-2014-0052

DO - 10.1108/JFRA-06-2014-0052

M3 - Article

VL - 13

SP - 119

EP - 140

JO - Journal of Financial Reporting and Accounting

JF - Journal of Financial Reporting and Accounting

SN - 1985-2517

IS - 1

ER -

ID: 5973206