Analysis of Selling, General and Administrative Cost Stickiness Empirical Study of Manufacturing Company Listed in the Jakarta Stock Exchange

Analysis of Selling, General and Administrative Cost Stickiness

Empirical Study of Manufacturing Company

Listed in the Jakarta Stock Exchange

Astri Novianti & Primanita Setyono

ABSTRACT

A traditional theory of cost behavior is that cost responses mechanically to activity volume. Mechanical means that cost adjust without management intervention. The purpose of this research is to investigate whether cost is “sticky” in different economic condition. The cost is sticky if whether cost increases more when volume rises than they decrease when volume is fallen by an equivalent amount. 69 manufacturing firms listed in the Jakarta Stock Exchange from 1993 to 2004 (divided into three period) were taken as sample using purposive sampling method. The statistical method used to test hypotheses is panel data log linear regression. The result of this study shows that: 1) cost stickiness is not found before and after economic crisis period, but it is found in during economic crisis period. 2)The degree of stickiness increases with employee intensity in each period with the highest stickiness before economic crisis. 3)The degree of stickiness increases with asset intensity before economic crisis period. While, during and after economic crisis, the degree of stickiness decrease with the increase asset intensity.

Keywords: Cost Behavior, Economic Crisis, Selling, General and Administrative Cost, Employee Intensity, Asset Intensity

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