Title: Sticky behaviour of selling, general, and administrative costs and earnings management practices: an international comparative perspective
Authors: Dimitris Balios; Nikolaos Eriotis; Vasilios Christos Naoum; Dimitrios Vasiliou
Addresses: Department of Economics, National and Kapodistrian University of Athens, Sofokleous, 1, 10559, Athens, Greece ' Department of Business Administration, National and Kapodistrian University of Athens, Sofokleous, 1, 10559, Athens, Greece ' Department of Maritime Studies, University of Piraeus, Grigoriou Lampraki, 21, 18533, Piraeus, Greece ' Department of Economics, National and Kapodistrian University of Athens, Sofokleous, 1, 10559, Athens, Greece
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.
Keywords: sticky costs; cost behaviour; earnings management incentives; accounting quality; selling; general; administrative costs.
DOI: 10.1504/IJMFA.2020.112336
International Journal of Managerial and Financial Accounting, 2020 Vol.12 No.3/4, pp.242 - 264
Received: 30 Apr 2019
Accepted: 29 Mar 2020
Published online: 12 Jan 2021 *