Corporate Board Committees and Asymmetric Behavior of Total Cost: Evidence from Pakistan

Abstract

For managers, management accountants, and financial analysts, understanding how costs work is a crucial and important challenge. Using agency theory, this paper answers the empirical question of whether corporate board committees can help to explain the asymmetric behavior of total cost (TC) of the firms listed in Pakistan Stock Exchange (PSX) as managerial conduct. Using a panel data regression model, we analyzed the data for the period 2014 to 2018 to evaluate the interaction effect of management corporate board committees on asymmetric cost behavior of total cost of 86 companies. Results show that total cost behave anti-sticky. But corporate board committees have no significant interaction with TC behavior. This study contributes to the management characteristics of one of the emerging economies by presenting proof of asymmetric cost behavior. In addition, the research expands the very few studies on the relationship between corporate board committees and asymmetric behavior of costs.