판매관리비와 미래 기업성과의 관계 = The Relationship Between SG&A Costs and Future Firm Performance

다국어 초록 (Multilingual Abstract)

From the viewpoint of fundamental analysis of financial statements, an increase in the ratio of selling, general, and administrative costs to sales (hereafter SG&A cost ratio) between two periods is generally perceived as a negative signal about future firm performance (Anderson et al. 2007). However, recent few studies have shown that the increasing SG&A cost ratio has a positive influence on future profitability and firm value (Baumgarten et al. 2010). The existing literature thus show mixed evidence concerning the effects of SG&A cost ratio on future firm performance. While it has been argued that the expenditure of SG&A costs improves future performance as Research and Development costs and advertising expenses might do, it may negatively affect firm value because the expenditure of SG&A costs may suggest agency problems. Although some studies argue for a positive influence of an increasing SG&A cost ratio on future performance, few studies empirically examine the association between SG&A cost ratio and future performance. Therefore, this paper investigates the association between SG&A cost ratio and future performance that has not drawn much attention in the literature. The main results of the study are as follows. When sales decrease, we find a positive relationship between SG&A cost ratio and future performance, measured as net income, operating income, and market values. Specifically, when sales decrease or when they are loss firms, we also find a positive relationship between SG&A cost ratio and future performance. However, when sales increase or when they are profit firms, we find no significant relationship between SG&A cost ratio and future performance. The contributions of this research are as follows. It extends Anderson et al. (2007) by examining positive association between the expenditure of SG&A costs and future firm performance. It is also hoped that this study contributes to the enhanced understanding of the expenditure of SG&A costs by managers, and provides various implications to capital market participants and policy makers.