The Determinants Of Sticky Cost Behavior On Political Costs, Agency Costs, And Corporate

171 Pages·2013·3.67 MB·English

by  Nuchjaree Pichetkun

THE DETERMINANTS OF STICKY COST BEHAVIOR ON
POLITICAL COSTS, AGENCY COSTS, AND
CORPORATE GOVERNANCE PERSPECTIVES

NUCHJAREE PICHETKUN

A DISSERTATION SUBMITTED IN PARTIAL FULFILLMENT OF
THE REQUIREMENTS FOR THE DEGREE OF DOCTOR OF
PHILOSOPHY IN BUSINESS ADMINISTRATION
FACULTY OF BUSINESS ADMINISTRATION
RAJAMANGALA UNIVERSITY OF TECHNOLOGY THANYABURI
ACADEMIC YEAR 2012
COPYRIGHT OF RAJAMANGALA UNIVERSITY
OF TECHNOLOGY THANYABURI
THE DETERMINANTS OF STICKY COST BEHAVIOR ON
POLITICAL COSTS, AGENCY COSTS, AND
CORPORATE GOVERNANCE PERSPECTIVES

NUCHJAREE PICHETKUN

A DISSERTATION SUBMITTED IN PARTIAL FULFILLMENT OF
THE REQUIREMENTS FOR THE DEGREE OF DOCTOR OF
PHILOSOPHY IN BUSINESS ADMINISTRATION
FACULTY OF BUSINESS ADMINISTRATION
RAJAMANGALA UNIVERSITY OF TECHNOLOGY THANYABURI
ACADEMIC YEAR 2012

Dissertation Title The Determinants of Sticky Cost Behavior on Political Costs,
Agency Costs, and Corporate Governance Perspectives
Name - Surname Mrs. Nuchjaree Pichetkun
Program Business Administration
Dissertation Advisor Associate Professor Panarat Panmanee, Ph.D.
Dissertation Co-advisor Mrs. Nimnual Visedsun, Ph.D.
Academic Year 2012

ABSTRACT
This study aimed to investigate the determinants of sticky cost behavior of Thai
listed companies by using the structural equation modeling (SEM) approach. In order to
obtain the good-fit cost behavior model, the AMOS (Analysis of Moment Structures)
program was employed to construct the measurement models to confirm the latent variables
of the sticky cost behavior model through the confirmatory factor analysis (CFA).
The results indicate that the measurement models were good-fit models. The
exploratory factor analysis (EFA) and multiple regression analysis were utilized to specify
the determinants of cost stickiness. The results show that adjustment costs and agency
costs were positively associated with the degree of cost stickiness, whereas political costs
and corporate governance were negatively associated with the degree of cost stickiness.
These findings will contribute to management for understanding cost behavior
which is critical to managers for planning, controlling and reducing costs. In addition, the
result of this study will also contribute to investors and financial analysts for understanding
managers’ behavior, which is useful information in making the investment decisions.
However, it is not publicly disclosed.

Keywords: sticky cost behavior, asymmetrical cost behavior, adjustment costs,
political costs, agency costs, corporate governance
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DECLARATION
This work contains no material which has been accepted for the award of any other
degree or diploma in any university or other tertiary institution and, to the best of my
knowledge and beliefs, contains on material previously published or written by another
person, except where due reference has been made in the text.
I give consent to this copy of my dissertation, when deposited in the university
library, being available for loan and photocopying.

Nuchjaree Pichetkun

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ACKNOWLEDGEMENTS

This dissertation is the culmination of a long and challenging journey taken with
several wonderful people. Firstly, I would like to thank my principal advisor, Assoc. Prof.
Dr. Panarat Panmanee, whose relentless pursuit of excellence and constant thirst for
knowledge motivated and influenced my thinking about accounting. I would like to thank
my co-advisor, Dr. Nimnual Visedsun who inspired my intellectual growth.
I have greatly benefited from the suggestions and discussions with dissertation
committees, Prof. Dr. Achara Chandrachai, Asst. Prof. Dr. Wachira Boonyanet, and Asst.
Prof. Dr. Wanchai Prasertsri. I would like to thank Assoc. Prof. Dr. Kanlaya Vanichbuncha
for her helpful suggestions about research methodology. Special thanks to my accounting
faculty for their cooperation and understanding. I am forever grateful to Rajamangala
University of Technology Thanyaburi for the financial support.
Finally, I would like to thank my parents, husband and young daughters for their
supports and patience through this long research journey.

Nuchjaree Pichetkun

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TABLE OF CONTENTS

ABSTRACT i
DECLARATION ii
ACKNOWLEDGEMENTS iii
TABLE OF CONTENTS iv
LIST OF TABLES viii
LIST OF FIGURES x

CHAPTER ONE: INTRODUCTION 1
Background and Statement of the Problem…..…………………………..………... 1
Theoretical Perspective……………………………………………………….…… 5
Purposes of the Study……………………………………………………….……… 8
Research Questions and Hypotheses……………………….……………….……… 8
Definition of Terms……………………………………………………………….... 10
Delimitation and Limitations of the Study….……………….…………………….. 12
Significance of the Study……………………………………………………….… 13

CHAPTER TWO: LITERATURE REVIEW 15
Traditional Cost Behavior Model…….…………………………………………..... 15
Empirical Evidence of Cost Behavior………….……………………..…………… 18
Adjustment Cost Theory………….……………………..………………………….. 24
Political Process Theory …………………………………………………….…… 25
Agency Theory………….……………………..…………………………….……... 30
Corporate Governance………….……………………..……………………………. 36
Summary……………………………………………………………….................... 46

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CHAPTER THREE: RESEARCH METHODOLOGY 50
Theoretical Framework…………………………………………………………….. 50
Research Design…………………………………………………….……………… 53
Selection of the Subjects…………..……………………………………….. 53
Instrumentation and Materials……………………………........................... 54
Variables in the Study……………………………………………………… 54
Data Collection………….….………………………………………………. 56
Data Processing and Analysis………………………………………………………. 57
The First Stage: Developing Measurement Model ………………………… 58
Confirmatory Factor Analysis (CFA)……………………………………… 58
1. Model Specification………………………………………………… 59
2. Model Identification………………………………………………… 61
3. Measure Selection and Data Collection……………………………… 62
4. Estimation and Evaluation…………………………………………… 66
5. Model Respecification……………………………………………… 69
6. Interpret Estimates…………………………………………………… 69
The Second Stage: Estimating Factor Scores……………………………….. 69
Exploratory Factor Analysis (EFA)…………………………………………. 69
The Final Stage: Constructing Structural Modeling of Sticky Cost Behavior 71
Multiple Regression Analysis……………………………………………….. 71
Robustness Test…………………………………………………………………….. 78

CHAPTER FOUR: RESERCH RESULTS 80
The Descriptive Statistic Summary……………………………………………….. 80
Measurement Models……………………………………………………………… 83
Adjustment Cost Model……………………………………………………. 83
Political Cost Model……………………………………………………….. 84

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Agency Cost Model……………………………………………………….. 86
Factor Scores………………………………………………………………………. 87
Structural Model of Sticky Cost Behavior …………………………………………. 88
Hypotheses Testing………………………………………………………………… 92
Robustness Tests…………………………………………………………………… 105
Summary…………………………………………………………………………… 108

CHAPTER FIVE: CONCLUSIONS AND RECOMMENDATIONS 109
Conclusion…………………………………………………………...……………... 110
Discussion of the Findings…………………………………………………………. 111
Sticky Cost Behavior of Thai Listed Companies…………………………… 111
Influence of Economic Growth……………………………………………... 113
Influence of Adjustment Costs……………………………………………… 114
Influence of Political Costs………………………………………………….. 115
Influence of Agency Costs………………………………………………….. 116
Influence of Corporate Governance………………………………………… 116
Limitations of the Study……………………………………………………………. 117
Recommendations………………………………………………………………….. 118
Recommendations for Chief Executive Officer (CEO) …………………… 118
Recommendations for Investors and financial analysts…………………… 118
Recommendations for Government or Regulators………………………… 119
Recommendations for the Stock Exchange of Thailand…………………… 119
Recommendation for Future research……………………………………… 119

LISTS OF REFERENCES………………………………………………………… 122

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APPENDIX
Appendix A: Total Listed Companies as of December 31, 2009
Classified by Industry Group……………………………… 130
Appendix B: Samples in the Study……………………………………… 133
Appendix C: AMOS Outputs of Confirmatory Factor Analysis………. 139
Appendix D: SPSS Outputs of Exploratory Factor Analysis…………… 155
VITA 158

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