Ownership Influence on Cost Elasticity

Posted: 8 Sep 2020

See all articles by Gianfranco Siciliano

Gianfranco Siciliano

China Europe International Business School - Accounting & Finance Department

Dan Weiss

Tel Aviv University - Coller School of Management

Date Written: August 31, 2020

Abstract

This study examines whether family ownership, a prevalent ownership type, is associated with cost elasticity, and the mechanism through which this effect occurs. The contribution is threefold. First, we find higher cost elasticity in family firms than in non-family firms. Second, results from five different empirical settings suggest that risk aversion of family shareholders motivates them to increase cost elasticity. Third, additional tests indicate that family firms focus on selling, general, and administrative costs to adjust their cost structures and modify both their assets and labor costs to achieve high cost elasticity.

Keywords: Cost Adjustments; Cost Elasticity; Ownership; Family Firms; Risk Aversion

JEL Classification: M41, D24, L23, D10

Suggested Citation

Siciliano, Gianfranco and Weiss, Dan, Ownership Influence on Cost Elasticity (August 31, 2020). Available at SSRN: https://ssrn.com/abstract=3684034

Gianfranco Siciliano

China Europe International Business School - Accounting & Finance Department ( email )

Shanghai-Hongfeng Road
Shanghai 201206
Shanghai 201206
China

Dan Weiss (Contact Author)

Tel Aviv University - Coller School of Management ( email )

P.O. Box 39010
Ramat Aviv, Tel Aviv, 69978
Israel

Here is the Coronavirus
related research on SSRN

Paper statistics

Abstract Views
284
PlumX Metrics