The Effect of Corporate Financing on Asymmetric Cost Behavior With Emphasis on the Moderating Role of Internal Control, Representation and Governance Mechanisms

Document Type : Original Article

Authors

1 Assistant Prof., Department of Management, University of Arak, Arak, Iran

2 Assistant Prof., Department of Management, University of Arak, Arak, Iran.

3 MA., Department of Accounting, Khoram Abad University, Khoram Abad, Iran.

Abstract

Asymmetric cost behavior refers to the different response of variable costs in case of an increase or decrease in the level of the company's operating activity due to managerial commitment decisions to preserve unused resources when the volume of activity decreases. The purpose of this research is to investigate the impact of corporate financing on asymmetric cost behavior, emphasizing the moderating role of corporate governance mechanisms. For this purpose, 119 companies of the Tehran Stock Exchange have been selected as the statistical sample of the research during the years 2011 to 2023. The results of the test of the research hypotheses indicate that financing has a significant and opposite effect on the asymmetric behavior of cost. Also, it can be inferred that in companies that do not have weak internal control, the relationship between financing and stickiness of the total cost of goods sold and administrative, general, and sales costs are reduced, so the company's internal quality control plays an effective role in managing asymmetric cost behavior. Also, the results showed that better governance mechanisms play an effective supervisory role in controlling managers' motivations.

Keywords

References

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Financial Management Perspective
Volume 13, Issue 44
2023
Pages 9-32

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