Effect of Private University Administration Inspection and Audit Review on Cost Behavior
Asian Tax Journal Vol. 24 No. 5 (2023), pp. 41-63
Abstract
This study analyzed the effect of administration inspection and audit review, which reduce agency costs, on asymmetric cost behavior. Many previous studies use agency costs to explain asymmetric cost behavior, but studies on asymmetric cost behavior for nonprofit companies are rare. Private universities have complex interests with students and parents, the government (Ministry of Education), and the university (President, Chairman of the Board). The purpose of this study is to verify how administration inspection and audit review, which have the effect of reducing agency costs in private universities, affect the asymmetric cost behavior. If administration inspection and audit review affect cost behavior by reducing agency costs, the private universities involved in the case will have weakened(elastic) downward stickyness of costs compared to other universities. As a result of this study, private universities that have received administration inspection and audit review have greater downward stickyness for salary, management and operation costs, general costs, facility costs, and operation costs according to changes in sales(sum of tuition income and government subsidy income) than universities that have not received administration inspection and audit review. In other words, administration inspection and audit review, which reduce agency costs, empirically analyzed the mitigation of downward rigidity in cost behavior. The contribution of this study was to confirm the results of previous studies by utilizing administration inspection and audit review of a private university, a non－profit company. In other words, it was suggested that agency cost is related to the downward stickyness of cost behavior. In addition, by analyzing changes in the cost behavior of private universities, information on the effectiveness of administration inspection and audit review was provided to government and private university officials.
Keywords
- private university
- agency cost
- administration inspection
- audit review
- asymmetric cost behavior
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