재무적 여력이 판매관리비의 하방경직성에 미치는 영향 = The Effect of Financial Slack on SG&A Cost Behavior

다국어 초록 (Multilingual Abstract)

This study examines the relationship between financial slack (cash holdings in order to make the planned investments) and selling, general, and administrative (SG&A) cost behavior. Since Anderson et al. (2003), many studies have found SG&A costs are sticky and investigated possible drivers of the asymmetric SG&A cost behavior. Those studies report that the adjustment cost of resources, managers` expectations of future sales, prior activity changes, and managerial incentives are major drivers of the asymmetric behavior in SG&A costs (Anderson et al. 2003; Banker et al. 2011). In addition, Banker et al. (2013a and 2013b) discuss the importance of managing slack resources from the viewpoint of each sticky cost driver. We extend the literature and examine financial slack as another source of asymmetric behavior in SG&A costs. Firms need capital to acquire and maintain corporate resources for operating activities. Thus, the financial slack of a firm could affect the firm`s decisions on operating resource management and hence its SG&A costs. When firms have a sufficiently large amount of cash holdings, they are less constrained in investment decisions and more capable of maintaining operating resources even in sales-decrease periods. Provided with higher resource productivity in particular, firms disposing of such productive resources in proportion to sales decrease may suffer more from opportunity costs of missing sales as demand rebounds in the next periods. Hence, in firms with large cash holdings, i.e., financial slack, managers are likely to maintain and utilize slack resources and SG&A costs more effectively. In addition to the size of cash holdings, the volatility of cash flow from operations ( CFO) could be another important financial characteristics that affect cost adjustment decisions. Cash flow created from operating activities is the most important source of capital for operating expenditures and investments (Tirole 2006; Mayer 1988). As the volatility of operating cash flow increases, there is a greater chance that a firm cannot timely increase its corporate resources when market demand increases. In other words, firms with high volatility in operating cash flow should be cautious in downward resource adjustment in response to sales decrease because they may not catch up on potential growth opportunities in the future. Based on Banker et al.`s (2012) prediction that allowing more slack resources is optimal when market environment is more uncertain, we examine whether or not firms with large volatility in operating cash flow maintain excess resources in SG&A activities. This study tests these conjectures using firms listed on the Korean Stock Exchange (KSE) or on the Korea Securities Dealers Automated Quotation (KOSDAQ). Our final sample consists of 10,747 firm-year observations from 2000 to 2012. We find that SG&A costs become stickier as the beginning balance of cash holdings increases. This result implies that financial slack helps to maintain excess resources in the adverse demand condition. Next, SG&A costs become stickier as the volatility of CFOincreases. The effect of the volatility of CFOis robust after controlling the volatility of revenues in the regression model. Interestingly, the result shows that the effect of the volatility of revenues is subsumed by the effect of the volatility of CFO. We also find that the positive association between the volatility of CFOand cost stickiness is salient when beginning cash holdings are large, which suggests that financial slack is helpful to maintain excess resources in periods of sales decrease. In additional tests, we examine how operating resource adjustment and financial slack management are associated by considering the productivity of slack resources. We first find that the change of cash holdings is positively related to the antistickiness of SG&A costs. When the change of cash holdings is divided into three parts (cash flows from operating, financing, and investing activities), both CFO and cash flow from financing activities ( CFF) are positively related to the antistickiness of SG&A costs. More importantly, we find that this relation is stronger for firms with low cash holdings or low return on assets. The results from our additional tests suggest that firms with low profitability or low financial slack reduce SG&A costs when sales decrease so that they can redirect the cost savings to build more financial slacks. This study has several contributions to the accounting and finance literature. First, extant studies on cost behavior have not studied the relation between financial characteristics and cost behavior. The literature on corporate finance provides evidence that financing activities can make critical impacts on operating decisions. This study fills the void in the accounting literature by documenting the effect of financial slack on cost behavior. Second, studies on financial slack, i.e. cash holdings, generally focus on the impact of cash holdings on future investments (e.g. Almeida et al. 2004; Fresard 2010; Faleye 2004; Campello et al. 2010). This research, in contrast, examines the role of financial slack on resource management decisions and finds the importance of cash holdings for maintaining current resources when sales decrease. Finally, this study shows that managers coordinate financial slack and operating resource slack managements as a whole in organization. We believe these points can help build a bridge among corporate finance and managerial accounting studies.

참고문헌 (Reference)

• 1 정형록, "한국제조기업의 비대칭적 원가행태 결정요인에 관한 연구" 한국회계정보학회 25 (25): 2-28, 2007
• 2 구정호, "전략적 선택에 따른 원가행태의 비대칭성" 한국회계학회 18 (18): 65-92, 2009
• 3 구정호, "이익조정 유인이 원가의 비대칭성에 미치는 영향: 적자회피 및 이익유연화, Big-Bath를 중심으로" 한국회계학회 36 (36): 135-177, 2011
• 4 이용규, "이익-보상 관계와 원가의 비대칭성" 한국관리회계학회 10 (10): 191-214, 2010
• 5 장지인, "비용항목을 통한 이익조정(법인세율 인하가 원가행태에 미치는 영향을 중심으로)" 한국회계학회 37 (37): 239-275, 2012
• 6 송승아, "분기별 비대칭적 판매관리비 행태 및 이익조정" 한국관리회계학회 13 (13): 137-164, 2013
• 7 구정호, "기업지배구조가 비대칭적인 원가행태에 미치는 영향: 경영자지분율과 외국인투자자 및 기관투자자지분율을 중심으로" 한국관리회계학회 11 (11): 1-35, 2011
• 8 장승현, "기업의 경영조건이 비대칭적 원가행태에 미치는 영향: 원가관리와 이익조정의 역할" 한국회계학회 34 (34): 71-107, 2009
• 9 Bates, T. W., "Why Do US Firms Hold So Much More Cash than They Used To?" 64 (64): 1985-2021, 2009
• 10 Lins, K. V., "What Drives Corporate Liquidity? An International Survey of Cash Holdings and Lines of Credit" 98 (98): 160-176, 2010
• 11 Tirole, J., "The Theory of Corporate Finance" Princeton University Press 2006
• 12 Campello, M., "The Real Effects of Financial Constraints : Evidence from a Financial Crisis" 97 (97): 470-487, 2010
• 13 Yang, L, "The Real Determinants of Asset Sales" 63 (63): 2231-2262, 2008
• 14 Banker, R. D., "The Moderating Effect of Prior Sales Changes on Asymmetric Cost Behavior" 2013
• 15 Haushalter, D., "The Influence of Product Market Dynamics on a Firm's Cash Holdings and Hedging Behavior" 84 (84): 797-825, 2007
• 16 Sopranzetti, B. J, "The Economics of Factoring Accounts Receivable" 50 (50): 339-359, 1998
• 17 Kim, C. -S., "The Determinants of Corporate Liquidity : Theory and Evidence" 33 (33): 335-359, 1998
• 18 Opler, T., "The Determinants and Implications of Corporate Cash Holdings" 52 (52): 3-46, 1999
• 19 Almeida, H., "The Cash Flow Sensitivity of Cash" 60 (60): 1777-1804, 2004
• 20 Chen, C. X., "The Agency Problem, Corporate Governance., the Asymmetrical Behavior of Selling, General., Administrative Costs" 29 (29): 252-282, 2012
• 21 Banker, R. D., "Sticky Cost Behavior: Theory and Evidence" Temple University 2011
• 22 McLean, D. R, "Share Issuance and Cash Savings" 99 (99): 693-715, 2011
• 23 Sopranzetti, B. J, "Selling Accounts Receivable and the Underinvestment Problem" 39 (39): 291-301, 1999
• 24 Froot, K. A., "Risk Management : Coordinating Corporate Investment and Financing Policies" 48 (48): 1629-1658, 1993
• 25 Berger, A. N., "Relationship Lending and Lines of Credit in Small Firm Finance" 68 (68): 351-381, 1995
• 26 Soufani, K, "On the Determinants of Factoring as a Financing Choice : Evidence from the UK" 54 (54): 239-252, 2002
• 27 Banker, R., "Loan Financing and Real Cost Management" Temple University 2013
• 28 Martin, J. S., "Investment Opportunities and Corporate Demand for Lines of Credit" 21 (21): 1331-1350, 1997
• 29 Montgomery, D. C., "Introduction to Linear Regression Analysis" Wiley 2006
• 30 Stein, J. C, "Handbook of the Economics of Finance" Elsevier 111-165, 2003
• 31 Myers, S. C, "Financing of Corporations" 1 : 215-253, 2003
• 32 Frésard, L, "Financial Strength and Product Market behavior : The Real Effects of Corporate Cash Holdings" 65 (65): 1097-1122, 2010
• 33 Banker, R. D., "Employment Protection Legislation, Adjustment Costs and Cross-Country Differences in Cost Behavior" 55 (55): 111-127, 2013
• 34 Jiménez, G., "Empirical Analysis of Corporate Credit Lines" 22 (22): 5069-5098, 2009
• 35 Degeorge, F., "Earnings Management to Exceed Thresholds" 72 (72): 1-33, 1999
• 36 Burgstahler, D., "Earnings Management to Avoid Earnings Decreases and Losses" 24 (24): 99-126, 1997
• 37 Roychowdhury, S, "Earnings Management through Real Activities Manipulation" 42 (42): 335-370, 2006
• 38 Dierynck, B., "Do Managerial Incentives Drive Cost Behavior? Evidence about the Role of the Zero Earnings Benchmark for Labor Cost Behavior in Private Belgian Firms" 87 (87): 1219-1246, 2012
• 39 Kama, I., "Do Earnings Targets and Managerial Incentives Affect Sticky Costs?" 51 (51): 201-224, 2013
• 40 Banker, R. D., "Demand Uncertainty and Cost Behavior" Temple University 2012
• 41 Agarwal, S., "Credit Lines and Credit Utilization. Journal of Money" 38 (38): 1-22, 2006
• 42 Balakrishnan, R., "Cost Stickiness and Core Competency : A Note*" 25 (25): 993-1006, 2008
• 43 Lee, Y. K., "Cost Behavior and Manager Type" 5 (5): 1-23, 2005
• 44 Hovakimian, G., "Corporate Investment with Financial Constraints : Sensitivity of Investment to Funds from Voluntary Asset Sales. Journal of Money" 38 (38): 357-374, 2006
• 45 Myers, S. C., "Corporate Financing and Investment Decisions when Firms Have Information That Investors Do Not Have" 13 (13): 187-221, 1984
• 46 Brealey, R. A., "Corporate Finance" McGraw-Hill/Irwin 2006
• 47 Harford, J, "Corporate Cash Reserves and Acquisitions" 54 (54): 1969-1997, 1999
• 48 Faleye, O, "Cash and Corporate Control" 59 (59): 2041-2060, 2004
• 49 Palazzo, B, "Cash Holdings, Risk., Expected Returns" 104 (104): 162-185, 2012
• 50 Acharya, V., "Cash Holdings and Credit Risk" 25 (25): 3572-3609, 2012
• 51 Hwang, L. -S., "CFO Lecture note" Seoul Economics and Management Press 2013
• 52 Sufi, A, "Bank Lines of Credit in Corporate Finance : An Empirical Analysis" 22 (22): 1057-1088, 2009
• 53 Banker, R. D., "Asymmetric Cost Behavior" Temple University 2013
• 54 Bates, T. W, "Asset Sales, Investment Opportunities., the Use of Proceeds" 60 (60): 105-135, 2005
• 55 DeAngelo, H., "Asset Liquidity, Debt Covenants., Managerial Discretion in Financial Distress : the Collapse of L. A. Gear" 64 (64): 3-34, 2002
• 56 Anderson, M. C., "Are Selling, General" 41 (41): 47-63, 2003
• 57 Baum, C., "An Introduction to Modern Econometrics Using Stata" Stata Press 2006
• 58 Jensen, M. C, "Agency Costs of Free Cash Flow, Corporate Finance., Takeovers" 76 (76): 323-329, 1986
• 59 Calleja, K., "A Note on Cost Stickiness : Some International Comparisons" 17 (17): 127-140, 2006