This study investigates whether the relationship between sticky costs and future earnings is moderated by managerial ability Prior studies have found that sticky costs represent on the one hand the inefficiency of cost control by managers and on the other hand the decision of managers to maintain resources when they are optimistic about the future in the face of declining sales Whether a firm adjusts its resources properly in the face of declining sales depends on the manager's judgment of the future firm's prospects and a proper assessment of the benefits of retaining resources Using a sample of Taiwanese listed companies from 2012 to 2017 the empirical results show that sticky costs are negatively and significantly associated with future profits in the companies with low managerial ability However in the firms with high managerial ability sticky costs are positively associated with future profits but it does not reach the statistically significant level The additional test found that the relationship between sticky costs and future earnings of firms with high R&D expenditures is greater than that of firms with low R&D expenditures due to managerial ability Overall this study provides some evidence that the relationship between sticky costs and future earnings will be moderated by managerial ability
Date of Award | 2021 |
---|
Original language | English |
---|
Supervisor | Ting-Kai Chou (Supervisor) |
---|
Sticky Costs and Future Earnings:Emphasizing the Moderating Effect of Managerial Ability
筱婷, 林. (Author). 2021
Student thesis: Doctoral Thesis