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Research Collection School Of Accountancy

Corporate governance

2011

Articles 1 - 2 of 2

Full-Text Articles in Business

The Agency Problem, Corporate Governance, And The Asymmetrical Behavior Of Selling, General, And Administrative Costs, Hai Lu, Hai Lu, Theodore Sougiannis Oct 2011

The Agency Problem, Corporate Governance, And The Asymmetrical Behavior Of Selling, General, And Administrative Costs, Hai Lu, Hai Lu, Theodore Sougiannis

Research Collection School Of Accountancy

Selling, general, and administrative (SG&A) costs represent a significant proportion of thecosts of business operations. On average, the SG&A costs to total assets ratio is 27 percent,compared to the research and development (R&D) to total assets ratio of 3 percent(Banker, Huang, and Natarajan 2011). Due to the importance of SG&A costs, practitionerspay close attention to controlling SG&A spending. Understanding SG&A cost behaviorand the role of managers in adjusting the costs is thus important to researchers andpractitioners. Recent empirical research indicates that SG&A costs behave asymmetrically,that is, they increase more rapidly when demand increases than they decline when demanddecreases (Anderson, Banker, …


Cfos Versus Ceos: Equity Incentives And Crashes, Jeong-Bon Kim, Yinghua Li, Liandong Zhang Sep 2011

Cfos Versus Ceos: Equity Incentives And Crashes, Jeong-Bon Kim, Yinghua Li, Liandong Zhang

Research Collection School Of Accountancy

Using a large sample of U.S. firms for the period 1993-2009, we provide evidence that the sensitivity of a chief financial officer's (CFO) option portfolio value to stock price is significantly and positively related to the firm's future stock price crash risk. In contrast, we find only weak evidence of the positive impact of chief executive officer option sensitivity on crash risk. Finally, we find that the link between CFO option sensitivity and crash risk is more pronounced for firms in non-competitive industries and those with a high level of financial leverage.