Sticky behaviour of selling, general, and administrative costs and earnings management practices: an international comparative perspective. (4th January 2021)

• Record Type: Journal Article
• Authors: Balios, Dimitris; Eriotis, Nikolaos; Naoum, Vasilios Christos; Vasiliou, Dimitrios
• Is Part Of: International journal of managerial and financial accounting. Volume 12:Number 3/4(2020)
• Page Start: 242
• Page End: 264
• Publication Date: 2021-01-04
• Subjects: sticky costs -- cost behaviour -- earnings management incentives -- accounting quality -- selling -- general -- administrative costs; Accounting -- Periodicals; Managerial accounting -- Periodicals; 657.05
• Languages: English
• ISSNs: 1753-6715

Abstract

The current study focuses on earnings management as a significant determinant of the sticky cost phenomenon, for explaining both firm-level cost behaviour and cross-country differences in cost behaviour. We combine firm-level incentives to manipulate earnings with country-level differences in earnings management practices to provide a richer understanding of the effects of these practices to cost stickiness. Using a sample of G-7 countries (France, Germany, Italy, Japan, Canada, the UK and the USA) we find that cost stickiness is mitigated in the pervasiveness of earnings management.