[4_1]_2003_Anderson_et_al_Are_selling,_general_and_administrative_costs_sticky

It 1 revenue it the decrease dummyit variable is

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Unformatted text preview: t −1 + β5 ∗ Decrease Dummyi,t ∗ log Assets i,t Revenue i,t ∗ log Revenue i,t −1 Revenue i,t + β6 ∗ Decrease Dummyi,t ∗ log Employees i,t Revenue i,t ∗ log + εi,t . Revenue i,t −1 Revenue i,t The Decrease Dummyi,t variable is included in the last five terms in model (III), meaning that these terms are activated for all periods when 60 M. C. ANDERSON, R. D. BANKER, AND S. N. JANAKIRAMAN TABLE 4 Results of Regressing Annual Changes in SG&A Costs on Annual Changes in Sales Revenue and Determinants of Sticky Cost Regression specification: log SG&Ai ,t SG&Ai ,t −1 = β0 + β1 log Revenue i ,t Revenue i ,t + β2 ∗ Decrease Dummyi ,t ∗ log Revenue i ,t −1 Revenue i ,t −1 + β3 ∗ Decrease Dummyi ,t ∗ log Revenue i ,t ∗ Successive Decrease i ,t Revenue i ,t −1 + β4 ∗ Decrease Dummyi ,t ∗ log Revenue i ,t ∗ Growth i ,t Revenue i ,t −1 + β5 ∗ Decrease Dummyi ,t ∗ log Revenue i ,t Assets i ,t ∗ log Revenue i ,t −1 Revenue i ,t + β6 ∗ Decrease Dummyi ,t ∗ log Employees i ,t Revenue i ,t ∗ log Revenue i ,t −1 Revenue i ,t + εi ,t Decrease Dummy takes the value of 1 when revenue in period t is less than revenue in t − 1, 0 otherwise. Successive Decrease takes the value of 1 when revenue in period t − 1 is less than revenue in t − 2, 0 otherwise. Growth is the percentage growth in real GNP during year t . The reported t -statistics are based on White’s hetroskedasticity-corrected standard errors. The random coefficients model is estimated as described in table 3. Coefficient Estimates Predicted Sign β0 β1 + β2 − β3 + β4 − β5 − β6 − Adjusted R2 Pooled Estimation (t -statistic) Random Coefficients Estimation (t -statistic) 0.0546 (27.01) 0.5444 (56.44) −0.2245 (−2.63) 0.2415 (8.30) −0.0179 (−1.83) −0.1496 (−11.38) −0.0338 (−2.04) 0.0209 (13.23) 0.6699 (74.58) −0.2514 (−5.59) 0.2227 (15.66) −0.0070 (−1.78) −0.0975 (−12.69) −0.0143 (−1.71) 0.4103 revenue declined. As in model (I), where the degree of stickiness increases ˆ with the magnitude of the negative value of β 2 , the degree of stickiness increases (decreases) with the magnitude of negative (positive) coefficients ˆ ˆ β 2 through β 6 in model (III). The results of estimating model (III) are presented in table 4. The estiˆ mated coefficient β 1 = 0.5444 is significant and positive (t -statistic = 56.44) and of similar magnitude as its value in the model (I) estimation of ˆ the pooled sample. The significant and positive coefficient β 3 = 0.2415 STICKY COSTS 61 (t -statistic = 8.30) indicates that the degree of stickiness is lower in revenuedeclining periods that were preceded by revenue-declining periods, consistent with hypothesis 3a that managers would consider a reduction in demand that occurred in successive years to be more permanent. The significant and ˆ negative coefficient β 4 = − 0.0179 (t -statistic = −1.83) indicates that the degree of stickines...
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