ABSTRACT
This study provides international empirical evidence for the asymmetric cost behaviour of operating expenses in the context of the European non-listed firms. We employed a data sample of 4,177,625 firm years observations from Amadeus Database for the period 2009–2017 to explore the asymmetric cost behaviour phenomenon at the EU-28 countries pool and country level. Substantial variation in the direction of the asymmetric cost behaviour, across countries and firm size clusters, has been observed. However, in a considerable number of cases operating expenses exhibit symmetric cost behaviour. We conjecture that the reasons behind the observed pattern of asymmetric cost behaviour in the organizational setting of non-listed firms are the relative low availability of entrepreneurial economic resources and the presence of entrepreneur which might affect the resource allocation decision-making process.
Disclosure statement
No potential conflict of interest was reported by the author(s).
Notes
1 During the time frame of our research, the UK was a member state of the European Union. For this reason, we employ the term EU-28 to refer to the pre-Brexit era and corresponds to the EU-27 and the UK.
2 Observations that indicate abnormal cost behaviour. For sales increases, this approach discards abnormal observations with declining costs and for sales decreases, this approach deletes observations with rising costs.
3 Our research design has been replicated by employing the entire data sample without applying the standard data elimination procedure. The untabulated results are quite similar with the reported ones..
4 Lev, Radhakrishnan, and Zhang (Citation2009) argue that a part of resource consumption directed on selling, general and administrative expenses is investment on the development of organizational capital. A firm’s level of organizational capital is its abnormal profits capitalized and amortized over the last five years scaled by the total assets of the firm. The abnormal profit of a firm is the sum of abnormal revenues and cost containment obtained as deviations from the predicted level of sales revenues and operating costs. The predicted level of sales revenues and operating costs is derived by a seemingly Cobb-Douglas log-linear econometric specification with independent variables level of the selling, general and administrative expenses, the number of employees, and the level of plant, property, and equipment..