Asymmetric Cost Behavior: Implications for the Credit and Financial Risk of a Firm
by Kristina Reimer (Author)

About the Author
Dr. Kristina Reimer received her doctoral degree at the University of Cologne. Her supervisor was Prof. Dr. Carsten Homburg from the Department of Management Accounting.

About this book
The thesis of Kristina Reimer provides a comprehensive analysis of asymmetric cost behavior (also known as cost stickiness) by discussing its origin and development in the theoretical and empirical research from the 1920s of the past century up until today. Further, using an empirical approach, she investigates the implications of asymmetric cost behavior for credit and financial risk of a firm. In addition, she provides an introduction into credit risk fundamentals by focusing on credit default swaps. Thereby she analyses the development of credit default swap market as well as the components of credit spreads. Finally, she provides several suggestions for future research.

About the Series
The series serves as a panel for outstanding research in the field of accounting. The underlying concept of accounting goes beyond the scope of traditional corporate accounting including, for instance, aspects of behavior control. The series focuses on quantitative analyses of current topics in management and financial accounting and considers both analytical and empirical research designs.

Table of contents
1 Introduction
2 Cost Stickiness Concept
    2.1 The Origin of Cost Stickiness in the Research Literature
    2.2 Theoretical Considerations of Cost Stickiness Occurrence
        2.2.1 Sources for Intended Cost Stickiness
            2.2.1.1 Rational Managerial Decisions
            2.2.1.2 Irrational Managerial Decisions
        2.2.2 Sources for Unintended Cost Stickiness
    2.3 Empirical Models of Asymmetric Cost Behavior
        2.3.1 The Model of Anderson, Banker, and Janakiraman (2003)
        2.3.2 The Model of Weiss (2010)
    2.4 Empirical Research in Asymmetric Cost Behavior
        2.4.1 Empirical Evidence on the Existence of Cost Stickiness
            2.4.1.1 Asymmetric Cost Behavior of Different Cost Categories
            2.4.1.2 Asymmetric Cost Behavior at Different Levels
        2.4.2 Empirical Evidence of the Cost Stickiness’ Determinants
        2.4.3 Empirical Evidence of the Cost Stickiness’ Implications
    2.5 Criticism
3 Theoretical Foundations of Credit Risk Fundamentals and Methods of Determining Credit Risk
    3.1 Definition and Classification of Credit Risk
    3.2 Credit Risk Measurement based on Theoretical Models
        3.2.1 Structural Models
        3.2.2 Reduced-Form Models
    3.3 Credit Risk Measurement based on Credit Default Swaps
        3.3.1 Definition and Structure of Credit Default Swap
        3.3.2 Credit Default Swap Market
        3.3.3 Credit Default Swaps and Credit Risk
        3.3.4 Discussion of Credit Default Swaps’ Applicability in Measuring Credit Risk
4 Does Cost Stickiness Affect Credit Risk?
    4.1 Idea and Motivation
    4.2 Related Literature and Hypothesis Development
    4.3 Data and Methodology
        4.3.1 Sample Selection
        4.3.2 Model Specification and Variable Measurement
    4.4 Empirical Results
        4.4.1 Descriptive Statistics
        4.4.2 Main Results
        4.4.3 Cross-Sectional Variation
    4.5 Addressing Endogeneity Concerns
    4.6 Robustness Checks
    4.7 Summary and Conclusion
5 Does Cost Stickiness Affect Financial Risk?
    5.1 Introduction and Motivation
    5.2 Data and Methodology
        5.2.1 Sample Selection
        5.2.2 Methodology
    5.3 Empirical Results
        5.3.1 Descriptive Statistics
        5.3.2 Regression Results
        5.3.3 Extended model
        5.3.4 Addressing Endogeneity Concerns
    5.4 Sensitivity Tests
        5.4.1 More Extensive Data Trimming
        5.4.2 Industry Affiliation
    5.5 Summary and Conclusion
6 Concluding Remarks, Limitations, and Future Research
    6.1 Summary of Results
    6.2 Limitations and Propositions for Future Research
Appendix
References

Series: Quantitatives Controlling
Length: 156 pages
Publisher: Springer Gabler; 1st ed. 2019 edition (July 10, 2018)
Language: English
ISBN-10: 3658228210
ISBN-13: 978-3658228217