Abstract
This study aims to determine the presence of stick costs (sticky costs) in Brazilian and US power companies. To this end, we collected data revenues, sold merchandise cost and taxes of 33 Brazilian power companies that are listed on the BM & FBOVESPA and 25 American companies of the same sector that trade their shares on the NASDAQ and the NYSE during the years 2004 to 2013. The research findings showed that the sticky costs can be verified in the Brazilian context, since for every percentage increase of 1% of revenue the variable costs increased 1.32%, while for 1% decrease in revenues, expenses 0.78% decrease variables. Since, in the American context, there has been the presence of sticky costs, given the linearity of the increase and decrease of the variable costs due to increased or decreased revenue. These results show the differences in the management of Brazilian and North American power companies.
Highlights
The high competitiveness among industrial organizations, of services or business, turned the cost management a key tool in the decision-making process (MAR-TINS, 2010)
Fixed costs have constant value regardless the volume produced, and variable costs have a symmetric behavior to variation in production volume, that is, the higher volume of production, the higher will increase costs resulted from this production (MARTINS, 2010)
The R-squared applied to this study indicates how much of the variation in income can be explained by the cost of goods sold: while
Summary
The high competitiveness among industrial organizations, of services or business, turned the cost management a key tool in the decision-making process (MAR-TINS, 2010). Studies have shown that the behavior of variable costs, dependent on the volume produced, is not as symmetrical as shown in traditional literature, as noted in Anderson, Banker and Janakiraman (2003), Medeiros, Costa e Silva (2005), Werbin, Vinuesa and Porporato (2012) and Richartz, Borgert and Lunkes (2014). Their behavior does not change so immediately when a cut in production occurs. The variable costs become sticky, staying in the company's cost structure for a period that exceeds the process of production cut, resulting in an asymmetrical behavior of variable costs volume, which situation is different from the one most recognized and widely publicized by academy nowadays
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