The managerial perception of uncertainty and cost elasticity

• 成果类型: Article
• 署名作者: Chen, Jason V.; Kama, Itay; Lehavy, Reuven
• 署名单位: University of Illinois System; University of Illinois Chicago; University of Illinois Chicago Hospital; University of Michigan System; University of Michigan
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2023.101613
• 发表日期: 2024
• 关键词: forward-looking statements; Textual analysis; INVESTMENT; earnings; BEHAVIOR; IMPACT

摘要

Theoretical research demonstrates the important role of uncertainty in shaping a firm's cost elasticity. We contribute to this literature by analyzing the inherent tension between the effects of uncertainty about unit contribution margin (CM) and sales volume on cost elasticity. We identify the occurrence of words implying uncertainty in managerial forward -looking statements and employ a novel methodology to construct distinct measures of the managerial perceptions of overall, unit CM, and volume uncertainty. We find a significantly positive (negative) association between the uncertainty about unit CM (volume) and cost elasticity. These associations vary predictably with firm and industry characteristics. Our empirical evidence supports the theoretical argument that managerial perceptions of uncertainty and its components differentially influence their resource allocation decisions and suggests that any analysis of the relation between uncertainty and a firm's cost elasticity should specify the type of uncertainty as well as the firm and industry characteristics. (c) 2023 Elsevier B.V. All rights reserved.