This study explores motivations underlying managers' resource adjustments. We focus on the impact of incentives to meet earnings targets on resource adjustments and the ensuing cost structures. We find that when managers face incentives to avoid losses or earnings decreases, or to meet financial...

Extensive theoretical research demonstrates the pivotal role uncertainty plays in shaping a firm's cost behavior. Our study contributes to this literature by conducting a comprehensive multivariate analysis of the inherent tension between the effects of price and demand uncertainty on cost...

We examine the effect of managerial expectations on asymmetric cost behavior in the context of resource adjustment costs and unused resource constraints. Our results show that the incremental impact of managerial expectations on cost asymmetry is the strongest when adjustment costs and unused...

We examine the effect of managerial expectations on asymmetric cost behavior in the context of resource adjustment costs and unused resource constraints. Our results show that the incremental impact of managerial expectations on cost asymmetry is the strongest when adjustment costs and unused...

This study explores the relationship between changes in managerial risk-taking incentives and adjustments of firms' cost structures, particularly the operating leverage (fixed-to-variable cost ratio). We find managers reduce operating leverage by substituting fixed costs with variable costs,...