Does CSR increase cost stickiness?

Ika Kristianti, Etna Nur Afri Yuyetta

Abstract


This study aims to provide evidence of corporate social responsibility (CSR) engagement with cost stickiness. Cost stickiness is an asymmetrical cost behavior in which the magnitude of the increase in costs tends to be higher when there is an increase in activity compared to the decrease in costs when there is a decrease in activity. The pattern of changes in costs depends not only on the size of the activity but also on the direction of the change. The research hypothesis states that the involvement of CSR requires the long-term commitment of the company in value creation activities, so it is difficult to suppress committed resources instantly. This study uses employee welfare costs and donations as a proxy for CSR. The research sample is a manufacturing company in Indonesia, with the observation year of 2017–2020. The results of the study prove that there is cost stickiness in selling, administrative, and general costs, and the degree of cost stickiness increases when CSR costs are added to the research model. The results also confirm that changes in activity levels and changes in costs are not always the same. These findings provide new evidence for understanding how CSR affects cost stickiness in manufacturing firms.


Keywords


corporate social responsibility; sticky costs; selling, administrative and general expenses

Full Text:

PDF

References


Afifah, HN, & Syafruddin, M. (2021). The Influence of Corporate Social Responsibility on the Company's Financial Performance with Risk as a Mediation Variable. Diponegoro Journal of Accounting, 10 , 1–14. http://ejournal-s1.undip.ac.id/index.php/accounting

Anderson, MC, Banker, RD, & Janakiraman, SN (2003). Are Selling, General, and Administrative Costs “Sticky”? Journal of Accounting Research , 41 (1), 47–63.

Aurenz, P., & Magnusson, A. (2021). The Impact of Corporate Social Responsibility on Cost Stickiness. In Lund University - School of Economics and Management . https://doi.org/10.1108/MIP-02-2018-0051

Banker, Rajiv D., & Byzalov, D. (2014). Asymmetric cost behavior. Journal of Management Accounting Research , 26 (2), 43–79.

Banker, RD, & Byzalov, D. (2014). Asymmetric cost behavior. In Journal of Management Accounting Research (Vol. 26, Issue 2). https://doi.org/10.2308/jmar-50846

Benobou, R., & Tirole, J. (2010). Individual and Corporate Social Responsibility. Economica , 77 (305), 1–19. https://doi.org/https://doi.org/10.1111/j.1468-0335.2009.00843.x

Cai, W., Lee, E., Xu, AL, & Zeng, C. (Colin). (2019). Does corporate social responsibility disclosure reduce the information disadvantage of foreign investors? Journal of International Accounting, Auditing and Taxation , 34 , 12–29. https://doi.org/10.1016/j.intaccaudtax.2019.02.001

Castello, M., & Lima, L. (2006). Corporate Social Responsibility and Resource Based Perspective. Journal of Business Ethics , 69 (1), 111–132.

Chen, CX, Lu, H., & Sougiannis, T. (2012). The Agency Problem, Corporate Governance, and the Asymmetrical Behavior of Selling, General, and Administrative Costs. Contemporary Accounting Research , 29 (1), 252–282.

Crilly, D., & Sloan, P. (2012). Enterprise logic: explaining corporate attention to stakeholders from the 'inside - out.' Strategic Management Journal , 33 (10), 1174–1193. https://doi.org/https://doi.org/10.1002/smj.1964

Darwin, A. (2006). CSR Accountability, Needs, Reporting and Disclosure for Companies in Indonesia. In IAI-KAM, eBar 3rd edition .

Fan, C., Li, Z., Fan, K., & Mao, H. (2021). Corporate social responsibility and cost stickiness: Evidence from China. ACM International Conference Proceeding Series , 70–73. https://doi.org/10.1145/3460824.3460836

Golden, J., Kohlbeck, M., & Rezaee, Z. (2020). Is Cost Stickiness Associated with Sustainability Factors? (Vol. 32). https://doi.org/10.1108/s1474-787120200000032002

Greening, DW, & Turban, DB (2020). Corporate Social Performance As a Competitive Advantage in Attracting a Quality Workforce. Business & Society , 39 (3), 254–280. https://doi.org/https://doi.org/10.1177/000765030003900302

Gregory, A., Tharyan, R., & Whittaker, J. (2014). Corporate Social Responsibility and Firm Value: Disaggregating the Effects on Cash Flow, Risk and Growth. Journal of Business Ethics , 124 (4), 633–657. https://doi.org/10.1007/s10551-013-1898-5

Habib, A., & Hasan, MM (2019). Corporate Social Responsibility and Cost Stickiness. Business and Society , 58 (3), 453–492. https://doi.org/10.1177/0007650316677936

He, J., Tian, X., Yang, H., & Zuo, L. (2020). Asymmetric Cost Behavior and Dividend Policy. Journal of Accounting Research , 58 (4), 989–1021. https://doi.org/10.1111/1475-679X.12328

Ibrahim, AEA, Ali, H., & Aboelkheir, H. (2022). Cost stickiness: A systematic literature review of 27 years of research and a future research agenda. Journal of International Accounting, Auditing and Taxation , 46 , 100439. https://doi.org/10.1016/j.intaccaudtax.2021.100439

Lusiana, L., & Kristianti, I. (2020). Sticky cost behavior in selling, general, and administrative costs in Indonesian manufacturing companies. Journal of Finance and Banking , 24 (2), 214–224. https://doi.org/10.26905/jkdp.v24i2.3195

Prabowo, R., Hooghiemstra, R., & Van Veen-Dirks, P. (2018). State Ownership, Socio-political Factors, and Labor Cost Stickiness. European Accounting Review , 27 (4), 771–796. https://doi.org/10.1080/09638180.2017.1329659

Pratami, AD, & Juliarto, A. (2020). The Impact of Csr Strengths and Csr Concerns on the Performance of Manufacturing Companies in Indonesia. Diponegoro Journal of Accounting , 9 (3), 1–10. https://ejournal3.undip.ac.id/index.php/accounting/article/view/29056

Restuti, MD, Gani, L., Shauki, ER, & Leo, L. (2022). Does Managerial Ability Lead to Different Cost Stickiness Behavior? Evidence from ASEAN Countries. International Journal of Financial Studies , 10 (3). https://doi.org/10.3390/ijfs10030048

Setiawati, LPE, Rasmini, NK, & Neem, NPSH (2017). Cost stickiness behavior in executive compensation of state-owned and non-state-owned banks listed on the Indonesia Stock Exchange. E-Journal of Economics and Business, Udayana University , 6 (5), 2337–3067.

Tjondro, E., Widuri, R., & Maria Katopo, J. (2016). Quality of Corporate Social Responsibility and Tax Avoidance with Profit Performance as Moderator. Journal of Accounting And Finance , 18 (2), 105–118. https://doi.org/10.9744/jak.18.2.105-118

Vonna, SR, & Daud, RM (2016). Analysis of Sticky Cost Behavior on Production and Non-production Costs (Empirical Study of Manufacturing Companies Listed on the Indonesia Stock Exchange Period 2011-2014). Scientific Journal of Accounting Economics Students (JIMEKA) , 1 (1), 120–132.




DOI: https://doi.org/10.26905/jkdp.v26i4.8980

Refbacks

  • There are currently no refbacks.


Bookmark and Share


Jurnal Keuangan dan Perbankan (Journal of Finance and Banking)

Diploma Program of Banking and Finance, Faculty of Economics and Business, University of Merdeka Malang

Published by University of Merdeka Malang

Mailing Address:
2nd floor Finance and Banking Building, Jl. Terusan Raya Dieng No. 57 Malang, East Java, Indonesia
Phone: -
Email: [email protected]

This work is licensed under a Creative
Commons Attribution-ShareAlike 4.0