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Permanent link (DOI): https://doi.org/10.7939/R3BR8MQ4C

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Competition and SG&A spending Open Access

Descriptions

Other title
Subject/Keyword
cost stickiness
competition
SG&A
Type of item
Thesis
Degree grantor
University of Alberta
Author or creator
Zhang,Rengong
Supervisor and department
Heather Wier
Examining committee member and department
Zhao,Mengxin(Department of Finance and Statistics)
McLean,David(Department of Finance and Statistics)
Yahya,Moin(Faculty of Law)
Anderson,Mark(University of Calgary)
Mashruwala, Shamin (Department of Accounting, Operations, and Information Systems)
Wier,Heather (Department of Accounting, Operations, and Information Systems)
Department
Faculty of Business
Specialization
Accounting
Date accepted
2015-08-31T15:52:37Z
Graduation date
2015-11
Degree
Doctor of Philosophy
Degree level
Doctoral
Abstract
The existing literature debates whether selling, general and administrative (SG&A) spending is on average beneficial to shareholders as an asset-like investment or detrimental to shareholders as the result of empire building. I address this debate by examining the behavior and consequence of SG&A spending in the context of product market competition. Using two natural experiment settings of industry deregulation and trade cost changes, I find that competition makes firms more committed to SG&A spending, as reflected in its degree of stickiness when sales decline. Subsample tests confirm the rationale that firms commit to intangible slack resources to avoid underinvestment and predation by competitors, and such slack resources have higher option value in more uncertain competitive environment. I also find that firms with high abnormal SG&A spending capture market share at the expense of their rivals, and such effect increases with competition. Overall, SG&A is on average an asset-like investment, and it plays a strategic role unexplored in the prior literature.
Language
English
DOI
doi:10.7939/R3BR8MQ4C
Rights
Permission is hereby granted to the University of Alberta Libraries to reproduce single copies of this thesis and to lend or sell such copies for private, scholarly or scientific research purposes only. The author reserves all other publication and other rights in association with the copyright in the thesis and, except as herein before provided, neither the thesis nor any substantial portion thereof may be printed or otherwise reproduced in any material form whatsoever without the author's prior written permission.
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