Predicting Earnings Using a Model Based on Cost Variability and Cost Stickiness

By Rajiv D. Banker, Lei Chen. 2006

258 citations recorded by the source corpus.

Subfields: Accounting, Finance, Management Science and Operations Research

View Paper: https://www.semanticscholar.org/paper/a0bce279c6bffd4a6220827c166841a15eea1f1a

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In Management Science and Operations Research

Citations in the corpus

Organization Capital and Sticky Behaviour of Selling, General and Administrative Expenses (2015, background): “A high level of adjustment costs prevents managers from reducing discretionary-resource 3 The retention of idle resources is used by a few studies in order to explain the relationship between cost change and future profitability (Banker and Chen, 2006; Baumgarten et al., 2010).”
Cost Behavior and Fundamental Analysis of SG&A Costs (2007, background): “Banker and Chen (2006) found that an earnings forecasting model reflecting both cost variability and cost stickiness outperformed earnings forecasting models based on disaggregation of earnings information as in Fairfield, Sweeney, and Yohn (1996) and Sloan (1996).”
Changes in Operational Efficiency and Firm Performance: A Frontier Analysis Approach (2013, unknown): “By contrast, another set of studies finds that analysts efficiently process accounting information (e.g., Brown, Richardson, and Schwager 1987; Rajgopal, Shevlin, and Venkatachalam 2003; Abarbanell and Lehavy 2003; Banker and Chen 2006; Frankel, Kothari, and Weber 2006; Weiss 2010).”
The Effects of Firm Growth and Model Specification Choices on Tests of Earnings Management in Quarterly Settings (2017, background): “Research evidence on sticky costs suggests that firms are slower to adjust inventory for sales declines than for sales increases (Banker and Chen 2006; Banker et al. 2015).(3) So inventory accruals vary asymmetrically with respect to negative versus positive sales changes. Anderson, Lee, and Mashruw”
Cost Behavior and Analysts’ Earnings Forecasts (2010, background): “Later work by anker and Chen 2006 reports that cost behavior explains a considerable portion of the analysts’ dvantage in earnings prediction over various time-series models.”
The Confounding Effect of Cost Stickiness on Conservatism Estimates (2016, unknown): “, earnings are more sensitive to sales decreases than to sales increases when costs are sticky (Banker and Chen, 2006).”
Demand Uncertainty and Cost Behavior (2014, unknown): “[15] Banker, R.”
Employment Protection Legislation, Adjustment Costs and Cross-Country Differences in Cost Behavior (2012, unknown): “Recognizing this potential source of asymmetry in cost behavior and hence in earnings changes has also been shown to be informative in forecasting earnings and understanding earnings management in financial accounting research (e.g., Banker and Chen, 2006, Weiss, 2010).”
Cost Structure and Sticky Costs (2014, background): “Second, our analysis suggests deeper investigation of works (Banker and Chen 2006a; Weiss 2009) that link sticky costs to analyst forecasts and market returns.”
The Moderating Effect of Prior Sales Changes on Asymmetric Cost Behavior (2014, background): “26 In untabulated results, we find that incorporating our two-period specification of cost behavior into the earnings prediction model of Banker and Chen (2006) leads to a significant improvement in earnings forecast accuracy.”
Asymmetric Cost Behavior (2014, unknown): “Banker and Chen (2012) analyze which cost behavior model analysts and investors use.”