Does community social capital affect asymmetric cost behaviour?

In this study, we examine the impact of community social capital on asymmetric cost behaviour. Community social capital captures the strength of social norms and the density of social networks in a region. As such, it is a socio-economic factor that might affect managerial resource adjustment decisi...

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Bibliographic Details
Published in:Management accounting research 2020-03, Vol.46, p.100640, Article 100640
Main Authors: Hartlieb, Sven, Loy, Thomas R., Eierle, Brigitte
Format: Article
Language:English
Subjects:
Cost behaviour
Cost stickiness
Managerial opportunism
Norms
Social capital
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Summary:In this study, we examine the impact of community social capital on asymmetric cost behaviour. Community social capital captures the strength of social norms and the density of social networks in a region. As such, it is a socio-economic factor that might affect managerial resource adjustment decisions via different channels. We find that firms headquartered in U.S. counties with high social capital exhibit significantly less asymmetry in cost behaviour. Community social capital restrains managers from taking opportunistic resource adjustment decisions that would induce cost stickiness. This is in line with our additional finding, that cooperative norms acting in an ethical manner are the dominant channel for our setting, by which community social capital affects cost behaviour. Our results corroborate the important role of managerial discretion in cost behaviour and make a significant contribution in understanding how local environmental factors explain differences in firms’ sticky cost behaviour.
ISSN:1044-5005
1096-1224
DOI:10.1016/j.mar.2019.02.002