Anderson, MarkLee, Joo Hyung2018-04-252018-04-252018-04-24Lee, J. H. (2018). Empirical Analysis of Asymmetric Cost Behavior (Doctoral thesis, University of Calgary, Calgary, Canada). Retrieved from https://prism.ucalgary.ca. doi:10.11575/PRISM/31827http://hdl.handle.net/1880/106541The dominant cost behavior model described in current management accounting textbooks is based on the classification of costs into fixed costs and variable costs. Although this cost behavior model provides insights about how costs behave in relation to the volume of production, it does not take into account managers’ role in cost management as circumstances change over time. The focus of my dissertation is on the asymmetric cost behavior (ACB) model that relates changes in costs to changes in cost drivers between periods and considers the role of managers in decision-making. Based on prior ACB literature, my first study develops and estimates a model of operating cost behavior that includes two cost drivers: sales revenue as a volume of activity driver and property, plant, and equipment in use (PP&E) as a physical capacity driver. My study finds that changes in selling, general and administrative (SG&A) costs separate between the two cost drivers, and that the explanatory power of an asymmetric cost behavior model including a second capacity driver is significantly greater than the explanatory power of the single-driver cost behavior model. In my second study, I document that cost asymmetry varies systematically across life-cycle stages in a manner that reflects the option value of future revenue changes. This indicates that managers’ decisions whether to keep or release slack resources is conditional on firm circumstances and that managers appraise slack resources as real options. Managing cash flows is an important concern facing managers, especially in highly uncertain business environments. In my third study, I test whether operating cash outflows are sticky and find that they are. Also, I test whether stickiness in operating cash outflows is influenced by short-term financial constraints represented by the current ratio and find that it is. These findings contribute to the sticky costs literature by isolating changes in operating cash outflows associated with changes in revenue.engUniversity of Calgary graduate students retain copyright ownership and moral rights for their thesis. You may use this material in any way that is permitted by the Copyright Act or through licensing that has been assigned to the document. For uses that are not allowable under copyright legislation or licensing, you are required to seek permission.Accountingdoctoral thesis10.11575/PRISM/31827