Asymmetric Cost Behavior--Sticky Costs: Expenses versus Cash Flows. Expenses versus cash flows

Efrat Shust, Dan Weiss

Research output: Contribution to journalArticlepeer-review


This note highlights a subtle aspect of the asymmetric costs literature not covered In the comprehensive review by Banker and Byzalov (2014). Specifically, we test the assertion underlying this literature that reported expenses can serve as an appropriate proxy for estimating the asymmetry of economic costs. Our findings refute this assertion, indicating that reporting choices influence the estimated asymmetry level of reported expenses. As a result, reported expenses are significantly more asymmetric (sticky) than economic costs. This evidence suggests that reporting choices required by GAAP matter in estimating cost stickiness. These findings enrich Banker and Byzalov (2014) by suggesting that future asymmetric costs research should (1) look for alternative accounting variables with the potential to capture economic costs, and (2) explore how various types of reporting choices affect asymmetric cost behavior. [ABSTRACT FROM AUTHOR]
Original languageAmerican English
Pages (from-to)81-90
Number of pages10
JournalJournal of Management Accounting Research
Issue number2
StatePublished - Dec 2014


  • Cash flow
  • Accounting
  • Earnings management
  • Financial statements
  • Depreciation
  • Earnings forecasting
  • asymmetric costs
  • cash flow
  • sticky costs


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