||The Impact of SFAS No.151 on the Cost Structure Decisions
||Department of Accountancy
2004年11月，美國財務會計準則(Statement of Financial Accounting Standards, SFAS)第151號公報「Inventory Costs」發佈，作為對會計研究公報(Accounting Research Bulletins, ARB)第43號第4章「Inventory Pricing」之修正。該公報規定: 固定製造費用分攤率的計算，應以正常產能作為分攤基礎; 另外，當公司之實際產量低於正常產能時，未分攤的固定製造費用必須認列為當期的閒置產能費用，不能認列為存貨成本的一部分。
The objective of this study is to explore whether SFAS No.151 has an impact on firms’ cost structure decisions, characterized in terms of cost rigidity and cost stickiness. Issued in November 2004, SFAS No.151, “Inventory Costs,” has amended the guidance in ARB No.43, Chapter 4, “Inventory Pricing,” to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted materials. SFAS No.151 requires firms to use normal capacity as the allocation base for fixed manufacturing overhead and to recognize those unused capacity as expenses in the income statement, accelerating the recognition of fixed production overheads as expenses in the income statement.
In order to investigate the issue underlying SFAS No.151, all manufacturing firms listed in the U.S. (SIC Codes 2000-3999) from the Compustat North America database during the sample period of year 2000 to 2015 (excluding the grey area from year 2005 to 2010 so as to prevent bias observations) are include as observations. The empirical results suggest that the enforcement of SFAS No.151 does affect firms’ cost structure decisions in a long run. In other words, the influence of SFAS No.151 on cost rigidity is negative on average, and such effect is more pronounced for firms with higher PPE, and diminishes with the increase in a firm’s sales growth rate. However, I find no evidence that the enforcement of SFAS No.151 affects cost stickiness neither on average nor for the firms with higher PPE, which may result from the estimated stickiness based on a short-term measurement thus may not capture the long-term structural adjusting effect. Additional tests indicate that the main results of SFAS No.151 on cost rigidity are robust with regard to controlling for an even longer-term structural change and considering the potential effect of the shrink demand in markets after financial crisis.
1. INTRODUCTION 1
1.1 The Background and Motivation of this Study 1
1.2 The Purpose of this Study 5
1.3 The Framework of this Study 6
2. LITERATURES REVIEW 8
2.1 The Background of SFAS No.151 8
2.2 Empirical Evidence 10
2.2.1 Empirical Evidence of Cost Structure 10
2.2.2 Empirical Evidence of Cost Stickiness 12
3. HYPOTHESES DEVELOPMENT 16
3.1 SFAS No.151 and Cost Rigidity 16
3.2 SFAS No.151, Cost Rigidity, and Property, Plant and Equipment 17
3.3 SFAS No.151, Cost Rigidity, and Sales Growth Opportunities 17
3.4 SFAS No.151 and Cost Stickiness 18
3.5 SFAS No.151, Cost Stickiness, and Property, Plant and Equipment 19
3.6 SFAS No.151, Cost Stickiness, and Growth Opportunities 20
4. RESEARCH METHODOLOGY 21
4.1 Research Models 21
4.1.1 Measuring Cost Rigidity 21
4.1.2 Measuring Cost Stickiness 24
4.1.3 Regression Model for Hypothesis 1 25
4.1.4 Regression Model for Hypothesis 2 26
4.1.5 Regression Model for Hypothesis 3 27
4.1.6 Regression Model for Hypothesis 4 28
4.1.7 Regression Model for Hypothesis 5 30
4.1.8 Regression Model for Hypothesis 6 31
4.2 Control Variables 32
4.2.1 Control Variables for H1 to H3 32
4.2.2 Control Variables for H4 to H6 33
4.3 Sample Selection 38
5. EMPIRICAL RESULTS 40
5.1 Empirical Results of Hypothesis 1 to Hypothesis 3 40
5.1.1 Descriptive Statistics of Hypothesis 1 to Hypothesis 3 40
5.1.2 Correlation Analysis of Hypothesis 1 to Hypothesis 3 43
5.1.3 Regression Results of Hypothesis 1 to Hypothesis 3 45
1. Regression Results of Hypothesis 1 45
2. Regression Results of Hypothesis 2 46
3. Regression Results of Hypothesis 3 49
5.2 Empirical Results of Hypothesis 4 to Hypothesis 6 51
5.2.1 Descriptive Statistics of Hypothesis 4 to Hypothesis 6 51
5.2.2 Correlation Analysis of Hypothesis 4 to Hypothesis 6 54
5.2.3 Regression Results of Hypothesis 4 to Hypothesis 6 56
1. Regression Results of Hypothesis 4 56
2. Regression Results of Hypothesis 5 58
3. Regression Results of Hypothesis 6 60
5.3 Additional Test 62
5.3.1 Measuring Cost Rigidity by Using Windows of Ten Years 62
5.3.2 Considering the Potential Influence of Shrink Demand after Financial Crisis 67
6. CONCLUSIONS 72
6.1 The Conclusions of this Study 72
6.2 The Contributions of this Study 74
6.3 The Limitations and Future Research of this Study 74
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