Labor adjustment costs and asymmetric cost behavior: An extension

The issue of asymmetric cost behavior has attracted significant interest in the managerial accounting literature. The literature has hypothesized that adjustment costs, particularly labor adjustment costs, play a significant and central role in driving empirically observed cost behavior patterns. Recent studies attempt to empirically test this hypothesis, albeit with distinct limitations. Using a new proxy for labor adjustment costs in a different population of firms, our study takes a fresh look at this hypothesis. We test the robustness of results documented in prior studies to help substantiate the credibility, reliability, and stability of prior findings.