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http://dx.doi.org/10.5762/KAIS.2018.19.9.100

The Effect of Corporate International Diversification on Cost Stickiness  

Rhee, Chang Seop (Sejong University, School of Business)
Woo, So Hee (Woosong University, Endicott College, Global Management)
Rhee, Hyun Jung (Chung-Ang University, School of Convergence and Liberal Arts)
Publication Information
Journal of the Korea Academia-Industrial cooperation Society / v.19, no.9, 2018 , pp. 100-107 More about this Journal
Abstract
This study investigated the effect of corporate international diversification on cost stickiness. A cost behavior that indicates a lower rate of cost reduction when the volume of sales decreases than the rate of cost increase when the volume of sales is increased is called cost stickiness. This cost behavior is caused by decisions made by considering the adjusting costs of the manager, and for corporate international diversification, the decision making on the adjustment cost of the manager has been reduced by the offsetting accruals hypothesis. From the empirical results, we observed that the cost stickiness of international diversified companies decreases. It is expected to contribute to the capital market and academia by identifying whether corporate international diversification can have a significant impact on management decision making related to costs.
Keywords
Corporate International Diversification; Cost Stickiness; Asymmetric Cost Behavior; Adjusting Costs;
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