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Determinants of Asymmetric Cost Behavior : focusing on Managerial Optimistic Bias, Manager’s Ownership

  • Journal of The Korea Society of Computer and Information
  • Abbr : JKSCI
  • 2020, 25(7), pp.159-165
  • DOI : 10.9708/jksci.2020.25.07.159
  • Publisher : The Korean Society Of Computer And Information
  • Research Area : Engineering > Computer Science
  • Received : June 2, 2020
  • Accepted : June 24, 2020
  • Published : July 31, 2020

Ji-Kyung Jang 1

1동서대학교

Accredited

ABSTRACT

With respect to the cause of asymmetric cost behavior, there are two streams of the literature. One stream focused on effect of managerial expectation and the other explained using agency system. In this study, we aim to investigate the determinants of asymmetric cost behavior in these streams. We first examine the impact of managerial overconfidence and optimistic bias on asymmetric cost. We also examine ownership ratio as a proxy of the quality of corporate governance effects on asymmetric cost. The results are as follows. First, firms have the anti-sticky asymmetric cost behavior. Second, we find that the firms with managerial optimistic bias mitigate the degree of asymmetric cost. This finding implies that managerial optimism is a factor that alters asymmetric cost behavior. Third, the degree of asymmetric cost is weaker in case of firms with higher manager’s ownership. This result provides an important empirical evidence for understanding the role of corporate governance in cost behavior.

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This paper was written with support from the National Research Foundation of Korea.
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