ATJ Asian Tax Journal

Asian Tax Journal

Print ISSN 1738-3323 Online ISSN 2733-9270

The Effect of Credit Risk on Cost Behavior of Unlisted Firms

  • Sung-kyoo Kim Korea Credit Guarantee Fund
  • Jung Hyung Rok Kyung Hee University
  • Choi， Hee Sun Hanyang University

Asian Tax Journal Vol. 22 No. 2 (2021), pp. 161-186

Abstract

The purpose of this study is to verify whether there is asymmetry in cost behavior for unlisted companies and whether unlisted companies at risk of insolvent try to reduce costs preemptively. For this, a regression analysis of 119,751 observations was performed using the model of Anderson et al. (2003). In addition, it was analyzed by dividing into 3 company types(unlisted large companies, external audit SMEs, non－audit SMEs) and 3 cost items(cost of goods sold, sales and general, administrative expenses, total costs) and divided into 4 industries(manufacturing, service, construction, distribution, etc.). The results are as follows. It was found that unlisted large companies and external audit SMEs showed sticky cost behavior in terms of cost of goods sold and non－audit SMEs showed sticky cost behavior in terms of sales and general, administrative expenses. Overall unlisted companies at risk of insolvent try to reduce costs preemptively. As a result of the analysis by industry, In the manufacturing industry, it was found that cost behavior is sticky and all cost items are being reduced in a situation of insolvent risk. On the other hand, the service and construction industry showed a anti－sticky cost behavior. This study analyzed in detail the cost behavior of unlisted companies by dividing them into company type, cost item, and industry, and provided an analysis of the cost behavior of non－listed companies at risk of insolvent by using actual insolvent information.

Keywords

  • non－listed company
  • credit risk
  • cost behavior
  • cost stickiness

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Asian Tax Journal

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Editor-in-Chief : Prof. Wanyong Kim Editorial Office : Dept. of Finance, Accounting & Taxation, Hanyang Cyber University, 220 Wangsimni-ro, Seongdong-gu, Seoul, Republic of Korea Tel : +82-2-2290-0418 / +82-10-8664-1117 E-mail : taxresearch2@hanmail.net