The Relationship between Financial and Non-Financial Factors on Adherence Cost
Subject Areas :hasan hemmati 1 , soheila molaei 2
1 - Professor and faculty member of the Institute of Higher Education Raja
2 - 2. Master of Accounting Institute Raja
Keywords: Asymmetric treatment costs (sticky cost), SGA, Non-financial factors (Members of non- are require Board- Concentrated ownership), financial factors (Capital structure - Dividend policy),
Abstract :
Recognition of costs’ behaviour in reaction to changes in levels of production and sales is of very high importance for management of the firm. recent studies on cost behavior have indicated that amount of cost reduction in response to a decrease in sales in less than amount of their increase in response to same amount of increase in sales revenoues. In this study we have tested the relationships between some financial and non-financial characteristics of the firm and stickiness of SG&A expenses, among firms listed on Tehran Stock Exchange (TSE). For this purpose, we specifically concentrated on three aspects of firm characteristics, namely, corporate governance mechanisms (including non-executive board members, and significant owners), capital structure policies (proxied by leverage ration), and dividend policy of the firms. Our final sample consists of 148 firms listed on TSE, during the years 2006 to 2010. Our results, in summary, showed that there is a significant relation between some of managements strategies (specifically, non-executive board members and Leverage ration of the firms) and degree of stickiness in SG&A expenses of the firms. Our findings are consistent with the extrapolated decisions hypothesis, proving that managers consider cost stickiness, and try to manage it considering current capacities, as well as, their expectations regarding future demand and activity level of the firm.
