ANALYSIS OF SELLING, GENERAL AND ADMINISTRATIVE COST
STICKINESS ON NET SALES AT DIFFERENT ECONOMIC CONDITION
(Empirical Study of Manufacturing Company Listed in the Indonesia Stock Exchange)
Astri Novianti & Primanita Setyono
I. INTRODUCTION
According to Cashin & Polimeni (1998, p.19), cost is defined as the benefits given
up to acquire goods or services. It means that cost is spent out by company in order to this
company gets benefits in the future. Related to volume, there are three kinds of cost
varied with changes in the volume of production; fixed cost, variable cost, and semivariable cost. Three of these costs have different behavior depending on the change of
input or output. In traditional theory of cost behavior, cost is divided into fixed and
variable cost in which cost responses mechanically to activity volume. Mechanical means
that cost adjust without management intervention (based on production schedule).
However, there are many arguments regard to this characterization of cost behavior
which is inconsistent with the way that managers manage cost (Cooper & Kaplan, 1998
cited in Anderson & Lanen, 2007), such as the action of managers in deliberately
adjusting resources as response to changes in volume. This matter effects on costs which
increase more when volume rises than they decrease when volume is fallen by an
equivalent amount. It is called as sticky cost. From the definition, it is shown that sticky
cost is an asymmetric reaction to activity change.
The degree of asymmetric cost behavior varies as result of deliberate decisions by
managers associated with adjustment cost (Anderson, Chen, & Young, 2005). For
example in Windyastuti & Biyanto (2005) research; In their research, they found that the
degree of cost stickiness increase with asset intensity but not with employee intensity. In
order to test the stickiness, it is used selling, general and administrative (SG&A) cost as
cost proxy and net sales as the relevant driver proxy. There are some considerations using
SG&A as cost proxy, as follows: 1) in previous research, it is shown that sticky is found
in operation cost than other cost categories (Anderson, et al, 2005), 2) according to
Hansen & Mowen (2000, p. 46), in manufacture organization, the rate of this cost can be
significant (± 25% of sales) and by controlling them, manufacture can lean in bigger
amount rather than other production costs. While, the rate of SG&A cost of net sales in
this sample is ± 12.3%. Inasmuch as SG&A cost is the subjected of managerial
discretion, this costs tend to have an asymmetric cost behavior. Hence, it is important for
us to know how managers manage this cost because the ratio of selling, general and
administrative costs to sales are closely monitored by investors and analysts (Palepu,
Healy & Bernard, 2000 cited in Anderson, et al, 2006). Other considerations of manager
in taking decisions, such as the economic condition of country at that time. As we know
that, in 1997, Indonesia went through an economic crisis implicating in all sectors. The
crisis effects on the decreasing of economic growth rate in Indonesia for 13.06% in 1998.
The economic activity getting the highest negative growth is activity relying on import
component (Pancawati, Pramuka & Jaryono, 2004). Manufacture is one of this groups (12% growth). From this number, we can see that because of negative growth, most of
manufactures got declining in revenue. The worst condition that probably can be
happened is the inability of company to pay the expenses. The most important thing is
how to sustain and normalize the condition in company itself. Surely, what managers do
in economic crisis will be different in health condition. It will give make difference in the
degree of cost stickiness or even there is no cost stickiness. Based on the previous
research (Windyastuti, et al, 2005), it is proven that the degree of selling, general and
administrative cost stickiness in growing economic condition is greater.
This research is to measure the stickiness of selling, general and administrative
cost on net sales and the degree of stickiness cost of Indonesia’s manufacturing industries
associated with adjustment cost (asset and employee intensity) before, during, after
economic crisis.
II. LITERATURE & HYPOTESIS
The Stickiness of Selling, General and Administrative Cost
Selling costs include cost of promoting, selling, and distributing products and
services, can be divided into fixed, variable, and semi-variable costs. Actually, these
costs move based on their behavior (costs respond mechanically to activity volume).
However, in Noreen & Soderstrom research (Anderson, et al, 2004), it is shown that
selling, general and administrative costs vary with sales volume but do not change
proportionately with changes in sales revenue (asymmetric cost behavior). These costs
increase more when volume rises than the decrease when volume fallen by an equivalent
amount. It is called as sticky cost by Anderson, Banker, & Janakiraman (Medeiros &
Costa, 2004).
The stickiness of cost happened because of the management intervention in
deliberate decisions. It is said that cost stickiness is consistent with a model in which
managers deliberately adjust resources as response to changes. This opinion is supported
by the evidence research that is done by previous researches, such as Medeiros et al.
(2004) in Brazilian firms, Anderson et al. (2005) in Southwest Airlines, Windyastuti et al.
(2005) in Indonesia firms listed in Jakarta Stock Exchange. When
company’s
revenue
decreased, managers must decide whether to maintain resources and bear the costs to
maintain that resources or reduce unutilized resources and incur the adjustment costs. If
managers believe that better condition will happen in the near future (temporary decline
revenue), they will choose to maintain resources and delay adjustment cost.
The degree of cost stickiness associated with adjustment cost
It is stated in the previous that sticky cost is consistent with the way that managers
manage cost (managerial mode). Managers deliberately adjust resources in response to
changes in volume. Hence, the degree of cost stickiness is sensitive to the variables that
proxy for adjustment cost (such as employee intensity, asset intensity).
The degree of cost stickiness associated with employee intensity
It is common for companies to face a fluctuated demand, moreover in this
globalization era with tight competition. Thus, it is important to the company to have
good resource (employees) in order to win this competition. There are several ways that a
company has done in having good employees, such as doing recruitment, training, giving
award for a good performance, etc. When a company’s sales decrease, it is difficult for
company to fire the employee to do adjustment cost (moreover, company that owns the
high employee intensity) because company believes the better demand in the near future
and firing will be costly.
The degree of cost stickiness associated with asset intensity
Beside employee intensity, asset intensity also gives impact on selling, general,
and administrative cost stickiness. When net sales decreased, management will reduce the
number of purchased resources or even stop the purchased. It is easy to reduce or even
stop the purchase if management buys from outside. Nevertheless, the condition will be
different for company that uses own resource (company’s assets). Selling the assets will
give lose for company because the company has to pay selling costs and loses firm
specific investment.
The impact of economic condition with the degree of cost stickiness
The economic condition of country in a certain time can give an influence in all
activities. It also influences the degree of cost stickiness. It is like what Anderson et al.
(2003, cited in Anderson, et al, 2005) said that the degree of stickiness is sensitive to
expect permanence of activity change (such as, macro-economic growth, previous
period’s activity). This opinion is also supported by Windyastuti et al. (2005) research.
Hypothesis Formulation
Hypothesis can be formulated, as follows:
H1a
: The selling, general and administrative cost stickiness happened before economic crisis
H1b
: The selling, general and administrative cost stickiness is avoided during economic crisis.
H1c
: The selling, general and administrative cost stickiness happened after economic crisis
H2a
: The degree of cost stickiness increased with the employee intensity of manufacture before
economic crisis period.
H2b
: The degree of cost stickiness did not increase with the employee intensity of manufacture during
economic crisis period.
H2c
: The degree of cost stickiness increased with the employee intensity of manufacture after
economic crisis period.
H3a
: The degree of cost stickiness increased with the asset intensity of manufacture before economic
crisis period.
H3b
: The degree of cost stickiness did not increase with the asset intensity of manufacture during
economic crisis period.
H3c
: The degree of cost stickiness increased with the asset intensity of manufacture after economic
crisis period.
III. RESEARCH METHOD
Population and Sample
The population of this research is manufacture listed in Indonesia Stock
Exchange. Sample is chosen by purposive sampling method. Sample selection of this
research are based on criteria as follows:
1. The chosen samples are manufacture companies listed in the Indonesia Stock
Exchange from 1993 until 2004.
2. Manufacture companies that are stated selling, general and administrative cost,
and net sales from 1993 – 2004 continually.
3. Manufacture companies that are stated employee, and total assets from 1994 –
2004 continually.
4. The nominal of selling, general and administrative cost is smaller than net sales.
Then, manufacture which has bigger SG&A cost than net sales is not used as the
sample.
5. The final step is to trim the top and bottom 0.5% for each variable (in order to
delete the extreme data or outlier).
Data was taken from Indonesian Capital Market Directory (1993 – 2004). Based
on the above criteria, there are 69 companies (cross section) chosen each year. The total
is 621 observations for the period of nine years (Table 3.1).
Variable Operation
Variables used in this research are:
1.
The ratio of current to previous selling, general and administrative cost.
2.
Ratio of current to previous net sales
3.
Indicator variable
In order to test the stickiness, it is added the indicator variable (dummy decline) in
this research (following the previous research). In as much as this matter, it is
added the indicator variable to regression equation that takes value “1” when
activity falls and “0” when activity do not falls.
4.
Employee intensity
Employee i,t
Employee Intensity =
NSi,t-1
5.
Asset intensity
Total Assets i,t
Asset Intensity =
NSi,t-1
Method of Analysis
It is using the panel data log-linear regression to test stickiness (by using Eviews
Software Version 4). It is like the previous research, panel data is used because research
data include some companies in certain time. Panel data is useful to increase the degree
of freedom and to decrease the collinearity between independent variable (Hsiao, 1995
cited in Windyastuti, et al, 2005). As the number of cross section is more than time series
(69 cross-section with 9 years), it is estimated to use Generalized Least Squares with
cross-sectional weighting, to better account for the heteroscedasticity in the model.
Generalized Least Square does not need the assumptions because it is a variable
transformation of Ordinary Least Square in which Manurung, Manurung, & Saragih
(2005, p.121-143): it is used to solve the problem of heteroscedasticity (inconstant
variant) and to solve the problem of autocorrelation (the correlation disturbance between
one period to another period). Each model in each period is also applied the
heteroscedasticity corrected standard errors (White correction in addition to the GLS
correction of the coefficient estimates themselves).
Model
The regression model is
SG&Ai,t
Log
SG&Ai,t-1
NS,t
= a0 + a1 log
NS i,t-1
NSi,t
+ a2 D* log
NSi,t-1
+ e i,t
……...1)
SG&Ai,t : Selling, General, & Administrative cost of manufacture i period t
SG&Ai,t-1:Selling, General, & Administrative cost of manufacture i period t-1
NSi,t
: Net
sales of manufacture i at period t
NSi,t-1
: Net sales of manufacture i at period t-1
D
: Dummy variable (value“1”when decrease activity, value “0” when increase
activity)
ei,t
: residual
Loglinear is used because this research uses categorical or nominal both the independent
and dependent variables (Tansey, White, Long, & Smith, 1996).
In order to test the degree of cost stickiness associated with adjustment cost,
model 1 is extended to include an additional variable designed to model 2:
SG&Ai,t
Log
NSi,t
SG&Ai,t-1
= a0 + a1 log
+ a3 Di,t* log
NSi,t-1
NSi,t
NSi,t
+ a2 Di,t* log
* log
Employee i,t
NSi,t-1
NS i,t-1
NSi,t
+ a4 Di,t* log
where Employee/NS
NSi,t-1
NSi,t-1
Asset i,t
* log
NSi,t-1
: employee intensity ; Asset/NS
+ e i,t
……...2)
: asset intensity
Statistical Test - Hypothesis Test
Hypothesis 1
Therefore, the statistical hypothesis for H1 are:
Ho1a
Ho1a
: a2 ≥ 0 ; Ha1a : a2 < 0 ; where
: The selling, general and administrative cost stickiness did not happen before
economic crisis
Ha1a
: The selling, general and administrative cost stickiness happened before
economic crisis
Ho1b
Ho1b
: a2 ≤ 0 ; Ha1b : a2 > 0 ; where
: The selling, general and administrative cost stickiness happened during
economic crisis
Ha1b
: The selling, general and administrative cost stickiness is avoided during
economic crisis
Ho1c
Ho1c
: a2 ≥ 0 ; Ha1c : a2 < 0 ; where
: The selling, general and administrative cost stickiness did not happen after
economic crisis
Ha1c
: The selling, general and administrative cost stickiness happened after economic
crisis
Hypothesis 2
The higher employee intensity, the higher degree of SG&A cost stickiness.
Therefore, the statistical hypothesis for H2 are:
Ho2a
Ho2a
: a3 ≥ 0 ; Ha2a : a3 < 0 ; where
: The degree of cost stickiness did not increase with the employee intensity of
manufacture before economic crisis period.
Ha2a
: The degree of cost stickiness increased with the employee intensity of
manufacture before economic crisis period.
Ho2b
Ho2b
: a3 ≤ 0 ; Ha2b : a3 > 0 ; where
: The degree of cost stickiness increased with the employee intensity of
manufacture during economic crisis period.
Ha2b
: The degree of cost stickiness did not increase with the employee intensity of
manufacture during economic crisis period.
Ho2c
Ho2c
: a3 ≥ 0 ; Ha2c : a3 < 0 ; where
: The degree of cost stickiness did not increase with the employee intensity of
manufacture after economic crisis period.
Ha2c
: The degree of cost stickiness increased with the employee intensity of
manufacture after economic crisis period.
Hypothesis 3
Therefore, the statistical hypothesis for H3 are:
Ho3a
Ho3a
: a4 ≥ 0 ; Ha3a : a4 < 0 ; where
: The degree of cost stickiness did not increase with the asset intensity of
manufacture before economic crisis period.
Ha3a
: The degree of cost stickiness increased with the asset intensity of manufacture
before economic crisis period.
Ho3b
Ho3b
: a4 ≤ 0 ; Ha3b : a4 > 0 ; where
: The degree of cost stickiness increased with the asset intensity of manufacture
during economic crisis period.
Ha3b
: The degree of cost stickiness did not increase with the asset intensity of
manufacture during economic crisis period.
Ho3c
Ho3c
: a4 ≥ 0 ; Ha3c : a4 < 0 ; where
: The degree of cost stickiness did not increase with the asset intensity of
manufacture after economic crisis period.
Ha3c
: The degree of cost stickiness increased with the asset intensity of manufacture
after economic crisis period.
IV. RESULT
Descriptive Statistics
Table 4.1. shows the number of kurtosis, and skewness to know the statistic
description of data used. Log ratio of selling, general, and administrative cost (log y?)
and log ratio of net sales (log x1?) have leptokurtis (kurtosis > 3), which are 7.98 and
5.49. While, the skewness are 0.435 and 0.224. High kurtosis means that the data is
concentrated in the middle of distribution or normal distributed. Meanwhile, the low
skewness (close to zero) means there is no extreme data in the distribution. In conclusion,
both of data is normal distributed.
Log employee intensity (log x2?) and log asset intensity (log x3?) have platikurtis
(kurtosis < 3), which are 2.79 and 2.77. These numbers show that the data are not really
concentrated in the middle of distribution. While, the skewness are -0.049 and 0.376.
Low skewness means that there is no extreme data in the distribution. Therefore, both of
data is normal distributed.
Regression Result
A. Before Crisis
Coefficient Determination
As shown in table 4.2.Mode.1 for model 1, the R² value is 0,837. It means that
83.7 % of SG&A cost variability can be explained by the panel log linear regression
model that proxies in the several independent variables (the ratio of net sales, decline net
sales, employee intensity, and asset intensity) and the less 16.3% is explained by other
variables. While, for model 2, the R² value is 0.856. It means that 85.6% of SG&A cost
variability can be explained by the panel log linear regression model, and the less 14.4%
is explained by other variables.
Simultaneous Regression Test ( F test)
From F test result in the table 4.2 (both of model 1 and model 2), it is shown that
the p-value of both model 1 and model 2 are 0,000 in the
= 5%. It means that
independent variables consisting of the ratio of net sales, decline net sales, employee
intensity, and asset intensity significantly influence dependent variable (variability of
SG&A cost).
Regression Analysis
From the test result above we can arrange multi regression model as follow:
a. Model 1 (the analysis of degree of SG&A cost stickiness)
SG&Ai,t
NS,t
Log
NSi,t
= 0.115 + 0.467 log
SG&Ai,t-1
+ 0.848 D* log
NS i,t-1
+ e i,t
NSi,t-1
b. Model 2 (the analysis of degree of S&A cost stickiness associated with
adjustment cost)
SG&Ai,t
Log
SG&Ai,t-1
NSi,t
= 0.108 + 0.49 log
-0.55 Di,t* log
-1.52 Di,t* log
NSi,t-1
NSi,t
NSi,t
-1.53 Di,t* log
* log
Employee i,t
NSi,t-1
NS i,t-1
NSi,t
Asset i,t
NSi,t-1
* log
NSi,t-1
+ e i,t
NSi,t-1
Hypothesis Analysis
1. The SG&A cost stickiness happened before economic crisis(H1a)
This hypothesis is proven by seeing the regression result from model 1. Based on
the theory, the SG&A cost stickiness is happened if a1 > 0, a2 < 0. From the regression
result, it is shown that the value of a1 is 0.467 (positive and significant). It means that if
the net sales increase for one percent, the selling, general and administrative cost will
increase for 0.467 percent. While, a1+a2 is 1.315. It means that if the net sales decrease
for one percent, the selling, general and administrative cost will decrease for 1.315
percent. The variability of SG&A cost in increase net sales is lesser than the variability of
SG&A cost in decrease net sales (anti sticky). This result is contradicted with the theory.
Therefore, the H1a is rejected; the selling, general and administrative cost stickiness did
not happen before economic crisis.
2. The degree of cost stickiness increased with the employee intensity of
manufacture before economic crisis period (H2a)
This hypothesis is proven by seeing the regression result from model 2. This
hypothesis will be accepted if a3 < 0. From the regression result, it shows that a3 is
significantly negative (-0.55). It means that before economic crisis period, when company
decline its activity, chooses to delay adjustment cost and bear the maintenances cost.
3. The degree of cost stickiness increased with the asset intensity of manufacture
before economic crisis period (H3a)
This hypothesis is proven by seeing the regression result from model 2. This
hypothesis is proven by seeing the regression result from model 2. This hypothesis will
be accepted if a4 < 0. From the regression result, it shows that a4 is significantly negative
(-1.51). It means that before economic crisis period, when revenue decline, it chooses to
delay adjustment cost.
B. During Crisis
Coefficient Determination
As shown in table 4.3 for model 1, the R² value is 0,857, it means that 85.7 % of
SG&A cost variability can be explained by the panel log linear regression model that
proxied in the several independent variables (the ratio of net sales, decline net sales,
employee intensity, and asset intensity) and the less 14.3% is explained by other
variables. While, for model 2, the R² value is 0.863. It means that 86.3% of SG&A cost
variability can be explained by the panel log linear regression model, and the less 13.7%
is explained by other variables.
Simultaneous Regression Test ( F test)
We can see the F test result in the table 4.3. (both of model 1 and model 2) that
independent variables consisting of the ratio of net sales, decline net sales, employee
intensity, and asset intensity significantly influence dependent variable (variability of
SG&A cost).
Regression Analysis
From the test result above we can arrange multi regression model as follows:
a. Model 1 (the analysis of degree of SG&A cost stickiness)
SG&Ai,t
Log
NS,t
NSi,t
= 0.003 + 0.77 log
SG&Ai,t-1
- 0.36 D* log
+ e i,t
NS i,t-1
NSi,t-1
b. Model 2 (the analysis of degree of S&A cost stickiness associated with
adjustment cost)
SG&Ai,t
Log
SG&Ai,t-1
NSi,t
= 0.0007 + 0.78 log
-0.018 Di,t* log
NSi,t-1
NSi,t
NSi,t
-0.52 Di,t* log
* log
NSi,t-1
NSi,t-1
Employee i,t
NS i,t-1
NSi,t
+0.165 Di,t* log
NSi,t-1
Asset i,t
* log
NSi,t-1
+ e i,t
Hypothesis Analysis
1. The SG&A cost stickiness is avoided during economic crisis (H1b)
This hypothesis will be accepted if a1 > 0, a2 > 0. From the regression result it is
shown that the value of a1 is 0.77 (positive and significant). It means that if the net sales
increase for one percent, the selling, general and administrative cost will increase for 0.77
percent. While, a1+a2 is 0.41. It means that if the net sales decrease for one percent, the
selling, general and administrative cost will decrease for 0.41 percent. The variability of
SG&A cost in increase net sales is higher than the variability of SG&A cost in decrease
net sales (sticky). This result is contradicted with the theory. Therefore, the H1b is
rejected; the SG&A cost stickiness happened during economic crisis.
2. The degree of cost stickiness did not increase with the employee intensity of
manufacture during economic crisis period (H2b)
This hypothesis will be accepted if a3 > 0. From the regression result, it is shown
that a3 is insignificantly negative (-0.018). The negative value means that stickiness cost
is happened but do not have big influence to this stickiness cost. It is contradicted with
the theory in which it is stated that stickiness is not happened during economic crisis
period. It means that H2b is rejected; the degree of cost stickiness increased with the
employee intensity of manufacture during economic crisis period.
3. The degree of cost stickiness did not increase with the asset intensity of
manufacture during economic crisis period (H3b)
This hypothesis will be accepted if a4 > 0. From the regression result, it is shown
that a4 is significantly positive (0.165). It means that during economic crisis period,
company that has high asset intensity will choose to sell some company’s assets because
company needs to solve the problem. Company needs to get cash in order to pay
liabilities and develop the business. Therefore, the higher asset intensity, the lesser
stickiness cost.
3. After Crisis
Coefficient Determination
As shown in the table 4.4 for model 1, the R² value is 0,675. It means that 67.5 %
of SG&A cost variability can be explained by the panel log linear regression model that
proxied in the several independent variables (the ratio of net sales, decline net sales,
employee intensity, and asset intensity) and the less 32.5% is explained by other
variables. While, for model 2, the R² value is 0.681. It means that 68.1% of SG&A cost
variability can be explained by the panel log linear regression model, and the less 31.9%
is explained by other variables.
Simultaneous Regression Test ( F test)
From F test result in the table 4.4 (both of model 1 and model 2). As shown table
above, it can be explained that the p-value of both model 1 and model 2 are 0,000 in the
= 5%. It means that independent variables consisting of the ratio of net sales, decline net
sales, employee intensity, and asset intensity significantly influence dependent variable
(variability of SG&A cost).
Regression Analysis
From the test result above we can arrange multi regression model as follow:
a. Model 1 (the analysis of degree of SG&A cost stickiness)
SG&Ai,t
Log
NS,t
= 0.096 + 0.29 log
SG&Ai,t-1
NSi,t
+ 0.59 D* log
NS i,t-1
+ e i,t
NSi,t-1
b. Model 2 (the analysis of degree of S&A cost stickiness associated with
adjustment cost)
SG&Ai,t
Log
SG&Ai,t-1
NSi,t
= 0.096 + 0.289 log
-0.02 Di,t* log
NSi,t-1
NSi,t
NSi,t
+0.42 Di,t* log
* log
NSi,t-1
NSi,t-1
Employee i,t
NS i,t-1
NSi,t
+0.157 Di,t* log
NSi,t-1
Asset i,t
* log
+ e i,t
NSi,t-1
Hypothesis Analysis
1.The SG&A cost stickiness happened after economic crisis(H1c)
This hypothesis will be accepted if a1 > 0, a2 < 0. From the regression result it is
shown that the value of a1 is 0.29 (positive and significant). It means that if the net sales
increase for one percent, the selling, general and administrative cost will increase for 0.29
percent. While, a1+a2 is 0.88. It means that if the net sales decrease for one percent, the
selling, general and administrative cost will decrease for 0.88 percent. The variability of
SG&A cost in increase net sales is lesser than the variability of SG&A cost in decrease
net sales (sticky). This result is contradicted with the theory. Therefore, the H1b is
rejected; the SG&A cost stickiness did not happen after economic crisis.
There is a better condition happened after crisis. Most companies have tried to
make better condition. Therefore, here, the focus of company is back to get more benefit
by controlling the costs. Management tries to push the operation cost in order to generate
more profit. Because of this condition, the decrease of cost when net sales decrease is
more than the increase cost when net sales increase.
2. The degree of cost stickiness increased with the employee intensity of
manufacture after economic crisis period (H2c)
From the regression result, it is shown that a3 is insignificantly negative (-0.02).
The negative value means that stickiness cost happened. Actually, the nature of cost
behavior is appropriate with the theory in which the higher employee intensity, the higher
stickiness cost. Nevertheless, from the insignificance, it means that management has done
the adjustment cost of SG&A resource but still retain some employees (only in little
number and not really influence the degree of stickiness cost).
3. The degree of cost stickiness increased with the asset intensity of manufacture
after economic crisis period (H3c)
From the regression result, it is shown that a4 is significantly positive (0.157). It
means that after economic crisis period, company that has high asset intensity will choose
to sell some company’s assets. It means that H3c is rejected; the degree of cost stickiness
did not increase with the asset intensity of manufacture after economic crisis period.
V. CONCLUSION & SUGESTION
There is a different degree of stickiness of selling, general and administrative on
net sales in different economic condition. Before economic crisis, the variability of
selling, general and administrative cost when net sales increase is lower than the
variability of selling, general and administrative cost when net sales decrease, which
mean stickiness does not happened. During economic crisis, the stickiness happened
(hypothesis 1b is rejected). While, after economic crisis, the stickiness does not happened
(hypothesis 1b is rejected). The variability of selling, general, and administrative cost
after crisis is lower than before economic crisis.
The different degree of selling, general and administrative cost stickiness on net
sales that is associated with employee intensity also happened in different economic
condition. In each economic condition (before, during, and after economic crisis), when
net sales decrease, the higher employee intensity, the higher degree of cost stickiness.
Nevertheless, the degree of cost stickiness in before economic crisis is higher than the
other periods.
The different degree of selling, general and administrative cost stickiness on net
sales associated with asset intensity is also happened in different economic condition.
Before economic crisis, the higher asset intensity, the higher degree of cost stickiness
(hypothesis 3a is accepted). While, during and after economic crisis, the higher asset
intensity, the lesser cost stickiness. It happened since the management tries to solve the
problem in that period. Nevertheless, there is a decreasing value after economic crisis.
Overall, researcher can conclude that the stickiness of selling, general and
administrative cost on net sales is found in Indonesia’s manufacturing companies.
Different economic condition influencing the degree of cost stickiness and it influenced
the way management make decisions.
For further research, will be better if concerning specific sample (categorize
firms based on their growth; low, middle, and high)., identify the degree of selling,
general and administrative cost stickiness specifically, such as research and development,
marketing, advertising and add other such as competition.
BIBLIOGRAPHY
Anderson, M., Banker, R., Huang, R., Janakiraman, S., 2004, Discretionary Selling,
General and Administrative Costs, Retrieved October 11, 2007
----, 2006, Cost Behavior and Fundamental Analysis of SG&A Costs, Retrieved October
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Anderson, SW., Chen, CX., Young, SM., 2005, Sticky Costs as Competitive Response:
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