R. Banker, Sudipta Basu, Dmitri Byzalov, Janice Y. S. Chen
{"title":"Asymmetries in Cost-Volume-Profit Relation: Cost Stickiness and Conditional Conservatism","authors":"R. Banker, Sudipta Basu, Dmitri Byzalov, Janice Y. S. Chen","doi":"10.2139/ssrn.2312179","DOIUrl":null,"url":null,"abstract":"Cost-volume-profit (CVP) analysis is based on a linear model of earnings behavior. However, recent research documents two potential sources of asymmetry in earnings: cost stickiness and conditional conservatism. We examine the implications of these asymmetries for CVP analysis and develop an “asymmetric CVP” (ACVP) framework incorporating both phenomena. ACVP estimates for Compustat/CRSP data reveal dramatic deviations from the standard CVP model (attributed to both stickiness and conservatism). These asymmetric deviations lead to major conceptual revisions in CVP analysis and have a large impact on various CVP benchmarks.","PeriodicalId":423722,"journal":{"name":"Fox: Accounting (Topic)","volume":"227 1","pages":"0"},"PeriodicalIF":0.0000,"publicationDate":"2013-03-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"10","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Fox: Accounting (Topic)","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.2139/ssrn.2312179","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"","JCRName":"","Score":null,"Total":0}
引用次数: 10
Abstract
Cost-volume-profit (CVP) analysis is based on a linear model of earnings behavior. However, recent research documents two potential sources of asymmetry in earnings: cost stickiness and conditional conservatism. We examine the implications of these asymmetries for CVP analysis and develop an “asymmetric CVP” (ACVP) framework incorporating both phenomena. ACVP estimates for Compustat/CRSP data reveal dramatic deviations from the standard CVP model (attributed to both stickiness and conservatism). These asymmetric deviations lead to major conceptual revisions in CVP analysis and have a large impact on various CVP benchmarks.
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