재무적 여력이 판매관리비의 하방경직성에 미치는 영향

This study examines the relationship between financial slack (cash holdings in order to make the planned investments) and selling, general, and administrative (SG&A) cost behavior. Since Anderson et al. (2003), many studies have found SG&A costs are sticky and investigated possible drivers of the asymmetric SG&A cost behavior. Those studies report that the adjustment cost of resources, managers’ expectations of future sales, prior activity changes, and managerial incentives are major drivers of the asymmetric behavior in SG&A costs (Anderson et al. 2003; Banker et al. 2011). In addition, Banker et al. (2013a and 2013b) discuss the importance of managing slack resources from the viewpoint of each sticky cost driver. We extend the literature and examine financial slack as another source of asymmetric behavior in SG&A costs. Firms need capital to acquire and maintain corporate resources for operating activities. Thus, the financial slack of a firm could affect the firm’s decisions on operating resource management and hence its SG&A costs. When firms have a sufficiently large amount of cash holdings, they are less constrained in investment decisions and more capable of maintaining operating resources even in sales-decrease periods. Provided with higher resource productivity in particular, firms disposing of such productive resources in proportion to sales decrease may suffer more from opportunity costs of missing sales as demand rebounds in the next periods. Hence, in firms with large cash holdings, i.e., financial slack, managers are likely to maintain and utilize slack resources and SG&A costs more effectively. In addition to the size of cash holdings, the volatility of cash flow from operations (CFO) could be another important financial characteristics that affect cost adjustment decisions. Cash flow created from operating activities is the most important source of capital for operating expenditures and investments (Tirole 2006; Mayer 1988). As the volatility of operating cash flow increases, there is a greater chance that a firm cannot timely increase its corporate resources when market demand increases. In other words, firms with high volatility in operating cash flow should be cautious in downward resource adjustment in response to sales decrease because they may not catch up on potential growth opportunities in the future. Based on Banker et al.’s (2012) prediction that allowing more slack resources is optimal when market environment is more uncertain, we examine whether or not firms with large volatility in operating cash flow maintain excess resources in SG&A activities. This study tests these conjectures using firms listed on the Korean Stock Exchange (KSE) or on the Korea Securities Dealers Automated Quotation (KOSDAQ). Our final sample consists of 10,747 firm-year observations from 2000 to 2012. We find that SG&A costs become stickier as the beginning balance of cash holdings increases. This result implies that financial slack helps to maintain excess resources in the adverse demand condition. Next, SG&A costs become stickier as the volatility of CFO increases. The effect of the volatility of CFO is robust after controlling the volatility of revenues in the regression model. Interestingly, the result shows that the effect of the volatility of revenues is subsumed by the effect of the volatility of CFO. We also find that the positive association between the volatility of CFO and cost stickiness is salient when beginning cash holdings are large, which suggests that financial slack is helpful to maintain excess resources in periods of sales decrease. In additional tests, we examine how operating resource adjustment and financial slack management are associated by considering the productivity of slack resources. We first find that the change of cash holdings is positively related to the anti- stickiness of SG&A costs. When the change of cash holdings is divided into three parts (cash flows from operating, financing, and investing activities), both CFO and cash flow from financing activities (CFF) are positively related to the anti- stickiness of SG&A costs. More importantly, we find that this relation is stronger for firms with low cash holdings or low return on assets. The results from our additional tests suggest that firms with low profitability or low financial slack reduce SG&A costs when sales decrease so that they can redirect the cost savings to build more financial slacks. This study has several contributions to the accounting and finance literature. First, extant studies on cost behavior have not studied the relation between financial characteristics and cost behavior. The literature on corporate finance provides evidence that financing activities can make critical impacts on operating decisions. This study fills the void in the accounting literature by documenting the effect of financial slack on cost behavior. Second, studies on financial slack, i.e. cash holdings, generally focus on the impact of cash holdings on future investments (e.g. Almeida et al. 2004; Frésard 2010; Faleye 2004; Campello et al. 2010). This research, in contrast, examines the role of financial slack on resource management decisions and finds the importance of cash holdings for maintaining current resources when sales decrease. Finally, this study shows that managers coordinate financial slack and operating resource slack managements as a whole in organization. We believe these points can help build a bridge among corporate finance and managerial accounting studies.