This study explores the effect of financial distress on the intensity of asymmetric cost behavior. Cost asymmetry refers to the different (i.e., asymmetric) response of variable costs between increases or decreases in the level of a firm’s operating activity due to deliberate managerial...

This study explores whether the intensity of cost asymmetry matters for bankruptcy prediction. An increased level of cost asymmetry implies increased requirements to finance a high level of adjustment costs due to high investments in prior period resource levels, decreased operating efficiency...