We synthesize the growing literature on asymmetric cost behavior — a new way of thinking about costs and, by extension …, earnings. While the traditional cost behavior model describes a mechanistic relation between activity and costs, this … alternative view recognizes the primitives of cost behavior — resource adjustment costs and managerial decisions. These primitives …

costs and unused resource constraints. Our results show that the incremental impact of managerial expectations on cost … asymmetry is the strongest when adjustment costs and unused resources are high. Conversely, when both are low, expectations have … magnitude of adjustment costs, and optimistic managerial expectations; by contrast, the strongest cost anti-stickiness occurs …

costs and unused resource constraints. Our results show that the incremental impact of managerial expectations on cost … asymmetry is the strongest when adjustment costs and unused resources are high. Conversely, when both are low, expectations have … magnitude of adjustment costs, and optimistic managerial expectations; by contrast, the strongest cost anti-stickiness occurs …

In the asymmetric cost behavior model, managers play an active role in determining cost behavior by adding or removing … resources as activity changes. Cost stickiness occurs when managers deliberately retain slack resources resulting from a decline …-in-place are reduced. We find that changes in SG&A costs separate between the two cost drivers, and that the explanatory power of …

areas of India, and that farmers respond more strongly to the forecast where there is more forecast skill and not at all … when there is no skill. We show, using an IV strategy in which the Indian government forecast of monsoon rainfall serves as … compared with farmers without access to forecasts. Even modest improvements in forecast skill would substantially increase …