Impact of Cost Stickiness on Stock Price Volatility:

A study of Non-Financial Sector of Pakistan

By
Sobia Shahzadi
2015-GCUF-12531

Thesis submitted in partial fulfillment of

The requirements for the degree of

MBA
Banking & Finance

DEPARTMENT OF BANKING & FINANCE

GOVERNMENT COLLEGE UNIVERSITY, FAISALABAD

March 2019

i
In the name of Allah,
the Most Beneficent,
the Most Merciful

ii
 Dedication:
I dedicated my work to my family and friends. A special feeling of gratitude to my loving parents,
whose words of encouragement and push for tenacity ring in my ears. I dedicated this work and
for special thanks to my respected supervisor Dr. Muhammad Ishtiaq for being there for me
throughout the entire MBA program and have supported me throughout the process.

iii
 Acknowledgement

Thanks to Allah Almighty to enabled to me on research work (thesis). I revere the patronage and
moral support extended with love, by my parents and my caring sister and brothers whose
financial support and passionate encouragement made it possible for me to complete this work.

I submit my heartiest gratitude to my respected teacher Dr. Muhammad Ishtiaq for his sincere
guidance and help for completing this work. I deeply indebted to my all respected teachers and
other members for their help in preparing this thesis.

My joy knows no bounds in expressing my cordial gratitude to my friends. Their keen interest and
encouragement were a great help throughout the course of this research work.

I humbly extend my thanks to all concerned persons who co-operated with me in this regard.

Sobia Shahzadi

iv
 DECLARATION

The work reported in this thesis is carried out by me under the supervision of Dr. Muhammad
Ishtiaq Department of “Baking and Finance” GC university Faisalabad, Pakistan. I hereby
declare that the title of thesis “Impact of Cost Stickiness on Stock Price Volatility: A Study of
Non-Financial Sector of Pakistan” and the contents of thesis are the product of my own research
and no part has been copied from any published sources (except references). The University may
act if the information provided is found inaccurate at any stage.

Signature of the Student/Scholar

Name: Sobia Shahzadi

Registration No: 2015-GCUF-12531

v
 Abstract
In this study discussed the main issue of cost stickiness with stock price volatility. Existing studies
investigate the impact of cost stickiness on stock price volatility in terms of conservatism. Efficient
control on the sticky costs which is beneficial for investors for stock price volatility. Many research
studies have been conducted for the effectiveness of presence of management low control on the
costs such as selling, general and administration has been the subject of many previous studies
with mixed finding and results. In this study investigates that how costs stickiness in term of
conservatism, impact on stock price volatility. In this study secondary data used from the annual
reports’ financial statement of non-financial companies that are listed in Pakistan Stock Exchange
(PSX) and Pakistan Stock Exchange Profile. with the 1475 observations from 2013 to 2017that is
used to analyses by using the descriptive and inferential statistics. For estimating the cost stickiness
Anderson model (2003) used. The results of this study indicate the insignificant impact of cost
stickiness on stock price volatility. The results of this study are very important for the management
in Pakistan.

vi
 Table of Contents

Dedication ..................................................................................................... .I

Acknowledgement…………………………………………………………...II

Declaration......................................................................................................III

Abstract ...........................................................................................................IV

Chapter One Introduction and Context of Study ............................................ 1

1.1 Introduction…………………………………………………………1
1.2 Background of Study……………………………………………….2
1.2.1 Factors that affect stock price……………………………6
1.3 Problem Statement………………………………………………….9
1.4Study Objective……………………………………………………...9
1.5Significance of study……………………………………………….10
1.6Structure of the Study………………………………………………11

Chapter Two: Literature Review……………………………………….14

2.1 Cost stickiness…………………………………………………...14
2.2 Stock price Volatility……………………………………………14
2.3 Accounting Conservatism……………………………………….15
2.4 Agency Theory………………………………………………….15
2.5 Critical review of existing study………………………………...16
2.6 Hypothesis Development……………………………………….42

vii
 2.7 Conceptual Framework………………………………………….42
2.8 Research Gap……………………………………………………43

Chapter Three: Data and Methodology………………………………...44

3. Introduction………………………………………………………44
3.1 Study population and Sampling…………………………….44
3.1.1 Study of population………………………………………44
3.1.2 Sampling…………………………………………………45
3.2 Data collection……………………………………………………47
3.3 Data Techniques and Analysis Procedure………………………...48
3.4 Research models and description of variables…………………....50
3.4.1 Dependent variable……………………………………....50
3.4.2 Independent Variable…………………………………....51
3.4.3 Control Variables……………………………………….52
3.4.4 Description variables…………………………………...55

Chapter Four: Results and Discussion…………………………………….56

4. Results and Discussion……………………………………………56

4.1 Descriptive Statistic……………………………………………...56

4.2 Inferential Statistic……………………………………………….58

4.2.2 Regression………………………………………………60

4.2.3 Co-efficient……………………………………………..60

4.2.4 T-Statistics………………………………………………60

viii
 4.3 Determination of model to estimate regression model…………..63

Chapter five: Conclusion…………………………………………………...66

5.1 Conclusion………………………………………………………..66

5.2 Contribution of Study……………………………………………66

5.2.1 Methodological…………………………………………67

5.2.2 Theoretical………………………………………………67

5.2.3 Practical………………………………………………….68

5.3 Limitation of Study……………………………………………….70

5.4 Recommendations ………………………………………………..71

5.5 Summary of study………………………………………………....72

References……………………………………………………………………73

ix
 Impact of Cost Stickiness on Stock Price Volatility:
A Study of Non-Financial Sector of Pakistan

Chapter One: Introduction and Context of the Study

1.1 Introduction:
This part of research provides the overview of paper. It defines the background, objectives and the
significance of this study. To draw a conclusion, it also provides the methodology that is used
during study.

Stock price plays an important role in every business and for stockholders especially for investors.
Developing economies are facing many disabilities in their financial markets, and with many other
factors, prices are more inconvenience, which is a major factor in capital consumption from capital
(Kanasro, Rohra and Junejo 2009). Due to this, the investors get scary and run away from the
market. Although it is not an incredible market, but due to high instability, there is a risk of
'accident' in the market. Stock market and individual security prices produce high instability and
it can reduce prices and attachments. Fama (1965) & French (1980) What are the reasons of high
volatility in the stock market is a long discussion between the market specialists and academicians
examined and determined that; volatility caused by trade itself. It means bigger the level of
occupation capacity, bigger the price arrangements. An irregular volatility is due to rejoinder
between capacity and price. It is also maintained that volatility is determined by trading capacity
followed by advent of new information about new glides, or any kind of secluded information that
integrate into market stock prices. The stock market volatility produced by numeral of features
such as; interest, inflation rate, financial leverage, dividends yield policies, corporate earnings,
bonds prices and many other macroeconomic, social credit policy and political variables are
involved (Bessembinder and Seguine, 1993).

Manager's motivation has been made with sensitivity for shareholders' price changes and the
stabilization of the general stock value. Stock price can lead to a sensitivity risk management
method. However, the cost of sensitivity is not the same and can reduce the risk of management

1
mechanisms. Cost stickiness allows us to read the price according to the instability of the stock
prices and the instability of the stock price, and the effect of this covertness is also tested on the
company's financial procedures and production policies. Cost stickiness has great effect on the
stock price volatility and reduction the price of stock.

Stock Price Volatility may weaken the horizontal operational of the monetary arrangement and
unfavorably affect economic performance (Ludvigson and Steindel 1999 and Poterba 2000).
Similarly, stock market volatility also has several undesirable suggestions. One of the ways in
which it moves the economy is through its consequence on buyer payments (Campbell, 1996;
Starr-McCluer, 1998).

Companies with higher cost sticking are less profitable, while the level of activity is lower with
low cost stocks, because the activities of more sticky expenses decrease the cost of lower interest.
It is said that the manager has reported low profits, in their pricing barriers and accounting plans
to break the conservative principle, which can pay a reduction in its profit or not.

1.2 Background of study:

Pakistan Stock Exchange Limited (PSX) Karachi Stock Exchange Limited (KSE) was recognized
on September 18, 1947. It was merged on March 10, 1949. Only five companies were primarily
listed with a total paid-up capital of 37 million rupees. The first index presented in KSE was
founded on 50 companies and was called KSE 50 index. Electronic trading system called Karachi
Automated Trading System (KATS) was presented in 2002 with a volume of 1.0 million
employments per day and the capability to offer connectivity to a boundless number of operators.
In October 1970, under the Securities and Exchange Ordinance of 1969 by the Government of
Pakistan, another stock exchange was recognized in Lahore in comeback to the requirements of
the regional capital of the jurisdiction of Punjab. It primarily had 83 memberships and was
contained in a hired building in the packed Bank Square part of Lahore. The LSE was the first
stock exchange in Pakistan to use the internet.
In Pakistan Stock Exchange two sectors are discussed, Financial sector and non-financial sector.

2
This study discussed the non-financial sectors like sugar, cement, manufacturing, Automobile
assemblers etc. the effect of cost stickiness on the stock price volatility discussed of that firms in
different manners.
Volatility is the measurement of statistically dispersion or central tendency of returns for a given
market index or share. By using some deviation measurement, the value of the share price such as
mean, range and variance and standard deviation between returns from that same market index or
share. Generally higher the volatility, high risk share. By the movement of market investors
achieve gain or loss from investment. The different types of volatility are historical volatility and
implied volatility. Movement of market can be estimated by the difference between the amount of
two stock prices in different periods and this movement can be used to calculate the volatility. The
volatility symbolizes the understanding of a marketplace change in the world economy.

In this study examine the costing sticking, which signs the agreement to provide resources which
is expensive to break, so the manager can decide to protect the resources, so the company can
report the reduction in revenue, but in revenue the proportion does not reduce the cost of this
proportion. In such a way, if the increase in expenditure in activities increases, spending time is
longer than the shortage of time, costs are sticky (Cooper and Kaplan, 2005).

In this study discussed the stock price volatility varying the price of securities or stocks which rises
due to the revealed the non-transparent evidence and contravention the principal of accounting
conservatism. Cost presentations designate to the cost’s response against difference in activity
level and other reasons. Share values could be pretentious by a summation of securities as well
as uncertainty in the market and current financial situation receipt of the formation.

volatility is an appalling item demanding all investors to fright and make variations to their group
directly. When undertaking in the stock market is active one day, prominently down for the next
week, then seems to be roaming rising another time, only to curved descending another time, that's
investors and traders call stock market volatility.

If there is not disclose full information about the financial reporting, manager may hide a part of
loss which may lead inter in the market fall the price of stocks or may lead the stock price volatility.

3
Investors are not in condition to identify the loss-making projects. In initial steps disability of
investors continues the losing projects increase gradually. The negative return on projects may
lead stock price fall due to non-transparent information. Cost stickiness is the cost behavior feature,
activity level increases, cost increase. Cost decreases when activity level decreases (Hutton et al
2009).

The effect of additional sales on income than its reduction (because of cost stickiness). Initiate that
monitoring a portion of direct effects of variations in selling quantity in timely irregular ordinary
models can cut timely irregularity expressively. Additionally, this governor will transformation
the mean conservatism level and conservatism total changes. The accurateness of assessments
showed that selling irregular variations is changed and separate from restrictive conservatism and
arranged with costs stickiness.

A reduction in stock market will deteriorate customer self-confidence and thus initiative downcast
customer payments. Stock market volatility may also disturb corporate speculation (Zuliu, 1995)
and financial growth (Levine and Zervos, 1996 and Arestis et al 2001). An increase in stock market
volatility can be construed as an intensification in risk of impartiality speculation and thus a change
of resources to less risky resources. This shift of investments form high volatile stocks to low
volatile stocks is apparent in markets where risk–averse investors are found. Thus, stock market
volatility can be a sticking point in the way of interest savings in a developing economy. Also,
volatility effects the circulation of portfolio proceeds as this has inferences for daily risk
management, portfolio selection and derivative pricing. Hence, it is very much important to
recognize that the behavior of volatility in an emerging economy.

Recent developments in understanding economic demonstrations and its features are encouraged
by the researchers' methods and methods of research, and researchers of different areas, such as
Physics, Mathematics, and Experts Economics (Neto et al. 2011).

Market balance (temporary) analysis is very important to give animated patterns of markets and is
also relevant to practical applications such as risk estimation and portfolio improvement. The profit
or loss of investment can be appreciated by market movement. This movement can be evaluated

4
by the difference between two stock prices, and this difference can be used to calculate markets'
instability. Properties of market change sensitivity temporarily in the world economy (Neto et al.
2011).

Managers must have information about cost stickiness. The price of buying a security on
an exchange, the change in activity level responsiveness about cost behavior data is most vital for
manager’s decision making for future planning budgeting, pricing, also determine the other
managerial issues at companies that are listed in Pakistan. In this paper indicate the relationship
between the cost stickiness and stock price volatility by way of accounting conservatism
(Mahdavinia and Zalfaghar, 2017). Accounting conservatism influences the relation between cost
stickiness and stock price volatility. Cost stickiness that managed mark agreements to source funds
which contravention is costly. Manager may decide to protect their used resources, so company
may report income decrease, but costs don’t decrease with the same ratio in income decrease. If
information hides in financial reporting, manager hides a part of loss to protect their jobs. Many
hidden copies stored in the firm intervene in the market, resulting in the failure of stock price as a
result leaving the manager's company. In a non-transparent reporting, investors are not able to
identify and disclose the loss-making project. Disability of investors about losses and profitable
makes the losing project continuously, due to this loss increase regularly Resource adjustment and
the cost of future cost structure to meet the revenue goals. When manager face the incentives to
avoid from loss or earning forecast and financial analysts. This decision of managers the degree of
cost stickiness rather than draw in (Mahdavinia and Zalfaghar, 2017).

The variations in the designs of cash flows, earnings and accruals concluded the last four periods.
In the absenteeism of a usually recognized definition of conservatism, numerous procedures of
journalism conservatism are recognized and observed. These actions depend on the accrual of non-
operating accumulations, the appropriateness of incomes with veneration to depraved and decent
news, features of the income’s circulation and the market-to-book proportion. The designs are
dependable with a growth in conventional fiscal broadcasting over time (Givoly and Hayn, 2003).

Several investors grasp the stock market is an unpredictable place to finance their money. The day-
to-day, four times a year and yearly changes can be studied, but it is this unpredictability that also

5
 produces the market revenues stockholder’s involvement. In this study explain how instability
affects stockholders' earnings and how to take advantage of it. (Hans Wagner, 2018).

 Volatility has intrinsic adverse characteristics but believing all such indicators are negative
is treacherous.

 One operative way to agreement with instability is to break the sequence despite over
reaction in the market.

 Increasing your situation at a deduction can be a very prevailing approach.

Several aspects can basis the price of a stock to increase or decrease from detailed update about a
corporation’s incomes to a transformation in by what means depositors impression about the stock
market in universal.

1.2.1 Factors that affect stock price (online website, 2018):

Factors that Affect the Stock Price

Company News Industry Performance Investor Economic Factors

and Performance
Sentiment

Interest Rate Economic Outlook Inflation Deflation

Value of Canadian Dollar Change in Economic Economic and Political Shocks

Policy

Figure 1.1

6
Company News and Performance:

There some specific factors that affect the stock price;

 news announcements on earnings and profits, and future estimated earnings

 declaration of bonuses

 overview of an innovative in product or an invention recollection

 safeguarding a new large agreement

 member of staff layoffs

 a modification of supervision

 accounting faults or disgraces

Industry Performance:
In the same industry, the stock price of companies will go together. That's why the market condition
usually affects companies in the same industry. if a company's competing to the same market,
profit from a piece of bad news for its competitiveness.

Investor sentiment:
Investor confidence can cause the market to go up or down, which can cause stock prices to
increase or decrease. Following ways that affect ten stock value:

 Bull market A stock market where stock prices are increasing, and investor self-confidence is
rising. It’s often secured to economic recapture or a fiscal successful, as well as depositor
confidence.
 Bear market A weak market where stock prices are dropping, and investor self-confidence is
declining. It frequently occurs when an economy is in downturn and job loss is from top to
bottom, by increasing values.

7
Economic Factors:

 Interest Rate:
If a firm take loan to expand the business, high rate of interest will affect the value of debt. This
may reduction in the profit and bounces that pay to shareholders. This may cause decrease in the
price of shares.
 Economic Position:
If economy is profitable to increase, stock prices may increase. Depositors may acquisition more
stocks rational they will realize upcoming proceeds and high stock prices. If the economic is
indeterminate, depositors may decrease their obtaining or jump trade.

 Inflation:

High prices will also frequently lead to higher interest rates. For example, the Bank of Canada may
increase interest rates to deliberate dejected inflation. These variations will be disposed to take
down stock prices.

 Change in Economic Policy:

If a new government comes into supremacy, it may resolve to variety new policies. Occasionally
these variations be good for occupational, and occasionally not. They can prime to variations in
rise in the rate of interest, which in go might move stock prices.

 Economic and Political Shocks:

A rise in energy costs can lead to lower sales, lower profits and lower stock prices. An act of
terrorism can also lead to a downturn in economic activity and a fall in stock prices.

It seems that the prices always change (usually in the wrong direction), but economists wonder
why prices are stabilizing. Supplies and demanding situations are constantly moving with
technology changes, consumer rules, regulations and regulations, and even evenings. At some
level, it is amazing to keep prices priced every day, or every minute (Tim hyde 2016). Clearly,

8
there is no reason why businesses are not considered to be able to change prices in response to
every prohibited economic impression, and a tension of economic thinking is that one of the
products Price change must be paid. These costs can take a lot of forms: Market analysis is required
to find the right price, to change the course to meet their implementation, and to meet the cost of
physical change to change the price. In many cases, these costs can be very high that businesses
do not decide to change its value until the age of the price becomes completely unstable (Tim hyde
2016).

Companies with higher cost sticky are less profitable, while the level of activity is lower with low
cost stocks, because the cost of less sticky reduces the cost, this is the question It is to ask that
whether the manager has reported low profits, their cost stickiness and accounting intends to break
the conservative principle, to compensate for a reduction in profit or not (Maghsuodi and
Bandarian 2014). Conditional conservatism that is a degree which identify the positive returns
about profit than negative returns about losses. It is associated with cost bonding (type of agency
cost).

1.3 Problem Statement:

The study of stock price volatility as a role of accounting conservatism is important for
management of costs. With the help of accounting principles guideline, this study can minimize
the cost and prevent the stock price volatility. Accounting conservatism suggest that managers
should disclosed the overall information about the company and no hidden the any loss, which
stable the price of stock. Accounting conservatism influence the relationship between the cost
stickiness and stock price volatility. The main issue discussed in this study for manager to find out
the relationship between profit and efficiency of a firm and minimization of cost. One of the
important discussions is cost behavior in management accounting and stock price volatility.

1.4 Study Objective:

 To evaluate the Effect of cost stickiness on stock price volatility in non-financial companies
listed in Pakistan Stock Exchange.
 To adjusting role of accounting conservatism on market stock price volatility.
 To examine the behavior in firm of each sales costs and effect on the cost stickiness.

9
  To determination of relation between variables.

1.5 Significance of study:

Study of stock price volatility in cost stickiness in term of accounting conservatism have important
role in costs management. Provides guidelines to investors and other stakeholders protection from
loss-making projects. Stock price volatility has several different claims for trading, capitalizing
and predicting the way of the stock market. If I can forecast the direction of the market, then I have
idea what the economy expects, so volatility has claim outside the stock market. Volatility can be
stated in a single stock and its performance relative to other stocks. Some stocks are more volatile
than others, some stocks have larger or more frequent price changes than other stocks. This
volatility called beta in stock, in stock market and volatility as a measurement of risk.
A trader stocks a profit from the investor at a different time frame. When investors look long-term,
traders must get profits in short periods. This means that traders can keep a stock for a short time
as a day or a year, but for a long time. For a trader, changes in previous day prices for stocks can
indicate whether they want to buy or sell.
Volatility is associated with unpredictability, uncertainty and has implications for market risk.
Generally, people tend to consider volatility as an indication of market disruption whereby
securities are not being priced fairly and the capital market is not functioning as expected. Changes
in the volatility of stock market returns can have significant negative effects on risk-averse
investors and on the economy thus many researchers have studied the movements of stock market
volatility and its effect on the economy (T U I Peiris and T S G Peiris 2014).
Following important things that hold about this subject as under:
 Provides the market price and demand at the highest level of the stock price.
 The cost of outstanding shares (market investment) at the time of the company is the cost
of the company. The value of shares of only two companies means meaningless.
 Theoretical revenues are the same that the investors influence the value of a company, but
there are other indicators that investors use to predict stock prices. Remember, these are
the emotions, behavior and expectations of investors who eventually influence stock prices.
 There are many ideas that try to explain the way to moving stock prices on the way.
Unfortunately, there is no such thing that can explain everything.

10
This study made an operative involvement methodology by assuming a limited mixture of different
data collection techniques and the procedures of data analysis to conduct a full devoted study on
some significant features of stock price volatility and cost stickiness in non-financial companies
of Pakistani.

Furthermore, this study plays a vital important in the current studies, it is not only a stage of
accumulation in the present theoretical evidence in the field of non-financial sector but also a

suggestion in the substantial technical as well as applied to critical area of research . This study

also provides a guideline to managers and investors about the stock price volatility and the costs
like selling, general and administrative. The finding of this research is more valuable for, market
thespian stakeholders, government, investment analytics, investigator.

1.6 Structure of the Study:

This study contains on the following chapters as under:
This chapter contains the abstract of the research. Abstract is the summary of the entire study.
Abstract contains on the purpose of the research, research design or methodology, findings of the
study, vale and limitation of the study. This section provides the overview of the whole study.

1.6.1 Chapter One:

This chapter provides the information of introduction of the study which is the brief overview of
the study, background of the study (This section provides the information of Stock Price Volatility,
Cost Stickiness, Accounting Conservatism), problem statement which is faced in this study,
objective and aim of the study presents the main purpose of study which indicate the main purpose
to conducting this study, significant of the study.

1.6.2 Chapter Two:

This chapter conclude the literature review of existing studies about the stock price volatility and
cost stickiness in accounting conservatism by different researcher or perspective. It indicates the
role of accounting conservatism to control the cost and stock price volatility. This section
highlights the impact of cost stickiness and accounting conservatism on the stock price volatility.

11
It also indicates the different models or methods adopted by the different investigators. This study
indicates the research gap based on existing studies of this research.

1.6.3 Chapter Three:

This chapter contains on the comprehensive methodology of this study that is applied on this
research for obtaining the aims and objectives of this research studies. Its present the purpose of
this chapter, population of this study, sampling of study, data collection, data techniques and
analysis procedures, model’s description, variables explanation and measurements the data for
results.

1.6.4 Chapter Four:

This designates the result of study based on the methodology, data collection techniques, different
statistical method, analysis and models. This chapter contains the dependent variable stock price
volatility, independent variable cost stickiness and control variables to examine the impact. This
chapter focuses on to examine the impact of cost stickiness on the stock price volatility. In this
chapter discuss the descriptive and inferential statistic to analyze the variables.

1.6.5 Chapter Five:

Finally, the last chapter delivers the conclusion of study, which is comprises on the summary of
finding and short overview of whole study. some limitations, suggestions and recommendations
are also discussed.

Abstract, review of study

Purpose, design, findings, limitations, value

Introduction Background of the Study

Background of the Study, Problem Statement, Study Objective, Significance of Study,
12
(Chapter One)
 Literature Review
Definitions, Critical Review of Existing Study, Conceptual Framework, Research Gap

(Chapter Two)

Methodology
Study of population, Sampling, Data collection, data techniques and analysis procedure,
variable description, model description

(Chapter Three)

Results and Discussion

Descriptive Analysis, Inferential Analysis

(Chapter Four)

Conclusion
Investigation and Findings of Study, contribution of the study, Limitations, suggestion
and Recommendations

(Chapter Five)

Figure 1.2

13
 Chapter Two: Literature Review

2.1 Cost stickiness:

Sticky of the costs is suggestive of the component, when income level is increased then increase
in rate of the costs, when income level is decreased, then decrease rate of the costs. This is known
as costs stickiness. It means that the change in cost in only depends on the change in activity
volume and direction of change in activity volume has no impact on the change in costs. The
behavior in firm of respectively sales cost, general costs, administration costs and each finished
costs of cost of goods sold and their effect on the cost stickiness (Asadi and Abdoli, 2015). cost
stickiness describes that it is an incident that results intentional decision of managers. When
managers face dealing with sales deficit, there are some who consider temporary reduction, and
expect overflow sales soon; Thus, managers who are deliberately hold on to declining during the
sales period (Yasukata, 2011). Cost behavior, cost increase when the activity level of a firm
increases and decrease when activity volume decreases with the same proportion but, decreases in
sales do not means decrease in sales costs. Management feel that decreases in sale temporary in
current period and will be compensated in near future by maintaining the resources. Decrease in
sales, managers decrease their resources in own operational activities, due to this spending more
time and cost for preparing resources (Rezaei and Barandagh, 2016).

2.2 Stock price Volatility:

A rate at which the price of any security increase or decrease for a given period. Volatility
measured by standard deviation for a set of periods of annual returns. If price of security changes
deliberately in long time, then it means low volatility. If price of security changes quickly in short
run, then it means high volatility. Volatility in the stock market is a long discussion between the
market specialists and academicians examined and determined that; volatility caused by trade
itself. It means bigger the level of occupation capacity, bigger the price arrangements Fama (1965)
& French (1980). An irregular volatility is due to rejoinder between capacity and price. It is also
maintained that volatility is determined by trading capacity followed by advent of new information
about new glides, or any kind of secluded information that integrate into market stock prices . The

14
stock market volatility produced by numeral of features such as; interest, inflation rate, financial
leverage, dividends yield policies, corporate earnings, bonds prices and many other
macroeconomic, social credit policy and political variables are involved (Bessembinder and
Seguine, 1993).

2.3 Accounting Conservatism:

Accounting conservatism is one of the four accounting conventions, which are standards,
customs or guidelines regarding the application of accounting rules.
Accounting conservatism provides an ethical guideline that creates reliable financial statements
and generates a dependable means of comparing financial results from industry to industry and
from year to year.

Accounting conservatism practices of a firm, any change in the investment effect the efficiency of
its earnings. Increase in the investment decreases the reporting earnings and generate investments.
Dropping in investment announcements individuals’ investments, growing incomes. If temporary
change in the investment, then deflated in the value in the current earnings but this is not beneficial
for future earnings (Penman and Zhang, 2002).

Accounting conservatism required high degree of confirmation before any claim to profit as it
entails appreciation of all losses as they are discovered and most outlays as they are incurred.

2.4 Agency Theory:

Several studies which is contains on the cost’s management are comprises on the financials or
market accomplishment taking the tactic of agency theory (chapple and Humphrey, 2014). Agency
theory is the fight between the managers and stockholders. According to the (Liu, Wei et al. 2014)
the agency problem happen when the managers of an organization do not care the interest of
stockholders while making decision. Management works as an agent of stockholders who are play
the role as principal and sometime there is conflict because management prefer their own interest
instead of principal. The focus of this study is that interest showed not of only one sided but
collective interest of both management and stockholders. Any participation among directors and

15
managers is a diverse substance. According to the condition both the directors and management
are the agents and do work for the interest of stockholders, (that are the principal of an
organization). An agency cost affects the stock price which is not favorable for an organization
and stockholders. Cost management expert should monitor the condition and diminish the agency
cost. The purpose of the agency theory is that to monitor the activities are suspected to line up the
attention of stockholders and managers and decrease the conflict of both parties, so that
organization earn more profit.

2.5 Critical review of existing study:

Mahdavinia and Zolfaghari (2018) Change in activity level responsiveness about cost behavior
data is most vital for manager’s decision making for future planning budgeting, pricing, also
determine the other managerial issues. In this paper investigate the relationship between the cost
stickiness and stock price volatility by way of accounting conservatism. Our results that in the
absence of accounting conservatism there is not a significant relationship between cost stickiness
and stock price volatility, but positive and significant relation between cost stickiness with high
conservatism of accounting and stock price volatility. Cost stickiness doesn’t influence the stock
price. Manger report low income, but do not decrease with the same proportion as income
reduction. Accounting conservatism influence the relation between cost stickiness and stock price
volatility, but this effect is direct and positive.

Asadi and Abdoli (2015) Cost stickiness is suggestive of the element that increases of the costs,
when increases the level of income and decreases the cost of sales decrease the level of income.
This is called costs stickiness. The main issue of this study for manager to find out the affiliation
among income and effectiveness of a firm and minimization of cost. One of the important
discussions is cost behavior in management accounting and finished cost accounting. In model of
cost accounting management variable cost ascending or descending according to the activity
volume change. It means that the change in cost in only depends on the change in activity volume
and direction of change in activity volume has no impact on the change in costs. The aim of this
paper is to study the behavior in firm of respectively sales cost, general costs, administration costs
and each finished costs of cost of goods sold and their effect on the cost stickiness. Results of
multivariate shows that sales cost administrative, general and advertisement have stickiness

16
relative to sales variation, but elements of finished cost such as direct material, work-in-process
and factory overhead (cost growth rate) has no stickiness relative to sales variation. This study also
identifies the relationship of manager optimism decision and cost stickiness. If mangers want to
increase their sales near future, then the cost stickiness increases. Results showed that cumulative
of managers’ optimism in predicting future sale has no substantial association with finished cost
stickiness, has positive relationship with sale, general and official costs stickiness.

Kama and Weiss (2013) This study encourages basic manager’s resource adjustment. This
discussion is focus on the impact of resource and the cost of upcoming cost structure to meet the
revenue goals. This study aims how manager’s choice about adjusting resources impact on cost
stickiness. Result suggests that understand the firm cost structure should be made clearly of
manager’s motivation. Agency driven incentives are understanding resources adjustment decision.
Managers face incentives to meet earnings target, manager cut off the dull resources to drop the
sales, if they expect that this drop in temporary. From this result greater decreases, the costs
stickiness. Hypothesis suggests that, Resource adjustment improve earnings targets and induces
cost stickiness. When sales decrease manager cut of the resources in the presence of incentives to
meet earning targets. Role of the intentional decision in determining the irregularity firm’s cost
structure. Some intentional decisions encourage the cost sticky while others reduce sticky cost. All
these depend on underlying motivation. A positive relationship between the equity incentives and
increase in input resources costs when input resources disbursement creates high future value.
Finding describe that equity incentives effect the manager’s decision about adjusting resources but
have not potential impact go equity incentives on asymmetry costs. These choices may cause
agency costs. Positive relationship between the agency problem and selling, general and
administration costs. The results provide valuable close for the management and financial
accounting and encourage more research to boost our perceptive of the role of motivations causal
managers’ decisions in determining firms’ cost structures.

Yasukata (2011) this research investigates the cost behavior suggests that cost do not change
proportions with changes in sales, indicating increase in cost, sales growth increases, but do not
decreases with the decreases in sales. One of hypothesis on cost stickiness describes that it is an
incident that results intentional decision of managers. When managers face dealing with sales

17
deficit, there are some who consider temporary reduction, and expect overflow sales soon; Thus,
managers who are deliberately hold on to declining during the sales period. This study provides
the evidence of deliberate decision theory and cost behavior theory. Managers predict that future
sales can increase soon, there are many resources in short quantities, although current sales
declining, terminating resources in response to sales reduction, and increasing sales compared to
re-recovery, the current profit is low. In this paper, use the predictions issued by the proxy for
managers, "Future prospects of selling and the concept are being examined that the result of the
manager's decision is that it is experienced. The result of the decision of managers' decision is
“sales forecasts have an impact on costs stickiness. In this study find that prices of future sales
prospects are related to the current level of barrier. The results provide a strong evidence that
sticking costs are a result of good decision makers.

Alavinasab et al. (2017) This study discussed the effect of economic growth on cot stickiness.
Examine by this study cost behave asymmetry with change of demand and investigate the impact
of economic prosperity on cost stickiness. For Regression analysis panel data used for
hypothecation. Result shows that selling, general; administration and operating cost of goods sold
behave asymmetry with the change of demand. Result from the regression model confirms the
three study of hypothesis. More, result shows that economic prosperity, costs are more stickiness
as compared to the recession period. Selling, general and administration costs are stickier than
operating costs of goods sold. Examine the impact of inflation rate and long-term and short-term
interest rate on costs stickiness. There is a negative relationship between the inflation rate and
operating costs stickiness, but a positive relationship between the long-term and short-term interest
rate and operating cost stickiness. This study evaluates the impact of decision making by managers
on cost stickiness. Results show that increases in sales, increase in costs but decreases the sales of
company, decrease in cost not observed or not this happen. Economic condition effects the
decision of managers whether there is prosperity or recession.

Maghsuodi and Bandarian (2014) In this study investigate the conditional conservatism that is a
degree which identify the positive returns about profit than negative returns about losses. It is
associated with cost bonding (type of agency cost). Foundation theory of conservatism. This study
aims asymmetry profit timeliness of earnings due to conservatism and cost bonding. It means costs

18
increases with the same proportion of sales increase, but when sales decreases then costs do not
decrease as the same proportion. Results showed negative and significant relationship between
firm size and conservatism for stronger information but direct relationship between market value
to book value ratio and financial leverage. Result also showed that assumption of cost bonding and
conservatism correlate between earnings and sales growth.

Rezaei and Barandagh (2016) In this paper investigate cost behavior, cost increase when the
activity level of a firm increases and decrease when activity volume decreases with the same
proportion but, decreases in sales do not means decrease in sales costs. Management feel that
decreases in sale temporary in current period and will be compensated in near future by
maintaining the resources. Decrease in sales, managers decrease their resources in own operational
activities, due to this spending more time and cost for preparing resources. Panel data used for
testing hypothesis, result conclude that there is a significant relationship between earning
management and cost stickiness due to the general, administration and selling costs. Agency cost
theory discussed in this paper. In this study agency cost is a factor that affecting the management
ability of decision making and motivation related to cost structure and resources. Management
ability has significant effect on cost of goods sold, further study about the relationship between the
cost and earning equality, corporate governance, no. of employee and cost structure.

Jalilian and Elyssai (2014) This research discussed the costs behavior demonstrations that costs do
not change according to changes in sales. The cost rises when the increase in sales, but it does not
decrease when the reduction in sales. The aim of this study is to examine the features distressing
the stickiness behavior of selling, administrative costs and sales. The results of the study showed
that for every 1% rise in sales level, administrative general costs, and sales rise to 66%, while for
every 1% reduction in selling costs, general, and administrative sales cut to 34%. Investigate the
phenomenon from the perception of representation theory and managers sustain the production
volume in the period of decrease in income. Likewise, in this study, the modification in the
sternness of stickiness costs in changed time phases were revised. The results designate that the
sternness of stickiness costs in the period in which the revenue drop arisen before is reduced. Also,
the sternness of stickiness costs for companies that have high debt ratio and the sum of the fixed
assets is higher.

19
Fasarany et al. (2015) Investigate the relationship between accounting conservatism and cost
stickiness. Issue arises in this paper in management accounting is cost behavior. Cost behavior
change with the change in cost simulation. Largeness variation in cost depend on the variation in
activity volume, but this variation in activity direction has no impact on the cost. Cost stickiness
arises due to two main features, management deliberating decisions and change in the committed
resources. Conservatism existing the propensity of profit and losses returns. In profit losses
imitated quicker than profit returns. Stock price reflect the current income. Accounting
conservatism, changing the identification of losses and profit returns has change the behavior of
symmetric interest. Results from hypothesis indicates that there is direct correlation between the
cost stickiness and accounting conservatism.

Hutton, Marcus and Tehranian (2009) discussed that If there is not disclose full information about
the financial reporting, manager may hide a part of loss which may lead inter in the market fall the
price of stocks or may lead the stock price volatility. Investors are not in condition to identify the
loss-making projects. In initial steps disability of investors continues the losing projects increase
gradually. The negative return on projects may lead stock price fall due to non-transparent
information. Cost stickiness is the cost behavior feature, activity level increases, cost increase.
Cost decreases when activity level decreases.

Roh (2003) The study discusses the prediction of accurate volatility, is the main task of risk
management, which uses pricing, handling, and option strategy of various departments. The first
study on stock market mainly focuses on estimating stock price index using financial time series
models and data mining techniques. This paper recommends the hybrid model with the Neurl
Network and time series model to predict the volatility of stock price index in two views: deviation
and direction. It offers temporary predictions for predicting Hybrid model utility. This model
demonstrates Neurl Network prediction utility combined with a series of time analysis for financial
instruments. This financial time series model can be analyzed with economies and can be explained
manually based on market and financial considerations. The financial time series models require
a strong idea about the time-series distribution, so it is difficult to reflect market variables in the
model. The purpose of this study is that prediction power in the stock price index domain can be

20
enhanced by mobilizing financial series models, such as EWMA, street, aggregate and ANN
models. This study indicated that ANN Time series models can increase prediction power for the
deviation and direction of accuracy. The pre-study has adjusted the weight of raw pollution again
through repeated error and learning error and found that the optimal capacity of input variables to
produce the best results. This study achieved the capability of input variables by the Financial
Times series process and removed the new variable, which could have impacted the results by
analyzing stock market domains.

Fasarany, Aslani and Barandagh (2015) The purpose of this study is to fill the gap in literature,
examining the answers to these questions, which have a relationship between accounting
protection and price stock in companies listed in the Tehran Stock Exchange. The results show
that there is a direct link between the value of sticky and accounting conservative behavior. One
of the issues raised in the management accounting discussion is the cost. Due to the change in cost,
cost behavior must be converted into a cost of behavior. There is key information for planning and
budgeting, product model pricing, breakdown point determination, and other administrative
decisions on the costs of activity or sales about changes in sales levels. Financial statements have
been promoting protection in the existence of advanced certification for bad news in comparison
to bad news. This means that in profits, bad news showed a high speed. Unusual losses are usually
identified before unrealized profits. The first objective of the test was to investigate the relationship
between sticky behavior and companies accounting protection. Potential data was used in the
research model and it was previewed in the form of this conceptual data.

Koo, Song and Paik (2015) This study investigates the effects of incentives for earning
management on sales, general and administrative costs for revenue management. This is the first
to show that cost management suspects and non-suspects cost are different costs. Consequently,
due to managing the cost of spending management costs or due to low sales, it is possible to prepare
a poor time. Cost is shown to be affected by display, capacity utilization, intensity of employee /
asset, sales trends, industry features, corporate governors, etc. This evidence has come to know
that due to the agency's problem, the manager is positively linked to the donation associated with
the encouragement of building the kingdom. In addition, believe that the positive organization
between the agency's difficulties and SG and A uniform cosmetics is clearer under the weak

21
corporate government. Managers are encouraged to manage costs for avoiding costs and other
reasons and encouraging revenue management will affect the impact on these firms' prices. To
manage revenue with higher management of institutions, the suspects demonstrated the installation
of weak prices in comparison to others. This process means that after selling at low prices,
companies have entered aggressively to manage revenue. One of these studies lacks control over
the weakness of the cost of the study, alternative methods for improving the strengthening of this
study have also been left behind.

Nazir et al. (2010) Corporate dividend policy has been a lot of investigative issue in corporate
finance. The current paper is also a challenge to examine the character of corporate divide policy
in defining the stabilization of stock prices in Pakistan. Fixed effect and random effect are
implemented on model panel data. The results found that the policy is very important in terms of
stock availability. The results are based on the first researchers of developing economies that the
price can be inadequate due to the effectiveness of corporate divide policy. After several studies,
there is still a contradiction between the relationship between the profitable payment and the
stabilization of the stock. The instability in stock price is usually correlated to long-term debt,
nonetheless, asset development, size and revenue policy income. There is an alternative aspect in
market risk that can affect the firm's policy. Due to operating risk, the opportunity of straight
contact among the imbalance and the cost of the price is prospective. This may cause minor
corporations' stock to market due to low information and more corruption. It leads to the instability
of the highest value of their stock. The dividend policy is also predictable to be negatively related
to speculation prospects. The initial rate of return rate in the company's primary cash flow varies
from time to time. So, this study added asset development as a control variable. This could be
additional probable condition in which marketplace situations, cost formulates etc. etc. may have
regular fluctuations, which make changes in the policy and differences. Temporary stability and
non-proportional income show that non-stable income companies are highly profitable in terms of
their dissatisfaction, many times a lot of time play harmful companies. This study has a significant
impact on both the policy measures inequality at the cost of shares. It shows that the flexible policy
affects the cost of stock and it provides a validation of the impact of the effects of the mediation,
the effects of the period and the information of information in Pakistan. Even though the

22
consequences are not strong enough, in case of established markets, but emerging stocks are
dependable with the performance of markets.

Paik and Koo (2017) One of the concepts of sticky cost behavior suggests that the managers have
delayed the management of the decision-making decision after their exposure to their own interests
and benefits. This study analyzes the impact of the agency's problem on the cost of analysis of two
firm level using stacking measures. First, it confirms that the agency's strength is strongly
strengthened by strong strength. Secondly, it shows that the positive relationship between the
agency's problem and the sticky cost behavior is strong in the small possession of the control share
compared to the larger share. This means that the prices of companies are lower due to the agency's
problem due to the installation of prices under the influence of barrier. Managers can make their
own interest decisions that cannot be the best for stock holders. It has been shown that the problems
of these agencies have become stronger with the huge increase in cash and companies' growth.
The castle is the representative example of the behavior of self-serving managers, through which
the manager maintains inactive capabilities under their control. This cost leads to stick because the
owners are not ready to dismiss known employees and reject personal identifications.

Porporato and Werbin (2010) One of the ideas made in traditional cost accounting books is that
variables spend higher than the proportion of income. Recent studies in management accounting
literature show that the intensity of the change in spending is not just the intensity of change in the
cost driver, but also the direction of this change (ascending or descending). To describe this
situation, many authors refer to sticky costs. Analysis The cost of current literature also applies to
sticky costs if the cost structure is not controlled. The results show that in the year 2004-2009,
Argentina, Brazil and Canada also get sticky expenses. If the sector's activity is expanded, the
expenses are less than the increase but the proportion; the relationship between the increase in the
total income and the increase in cost is positive because the theory is predicted. It is argued that
the total cost in this industry is followed by a sticky attitude because the increase in activity or
income volume increases the intensity of decreasing the volume of volume. A second set of results
shows that the value structure and the accurate climate for the behavior of economic climate cost.
The structure of the banks in each country affects the level of cost of increase in demand and
reduction. With higher proportion of fixed costs like Brazil, lower prices will be shown when
banks are expected to reduce. Investment intensity, such as Canada, will show higher expenses

23
while banking with high levels. Finally, those who work in the international economic environment
show the lowest increase in jobs like Argentina and the minimum cost will be shown in case of
demand reduction.

Bessembinder and Seguin (2013) Relationship between volume, volatility, and depth of market is
examined in eight physical and financial future markets. The evidence shows that temporarily
linked to the total volume do not remove all the information temporarily. When volume is divided
into expected and unexpected ingredients, paper is found that unexpected volume shock has a
major impact on the shock. Apart from this, it is as a matter of shock; the effect of positive
unexpected volume shock on instability is greater than the impact of negative shock. Lastly,
according to the depths of the market, this study shows that open-up interests show that
inefficiency is low. This study is about eight-foot markets in the relationship between trading
activities and the automotive, which employs the way of economy, which is inaccessible to non-
sustainability, volcanic, and perverted refund volumes. The interaction between and the
uncertainty of the unconditional return. This study has a very significant description for the regular
organizations listed. The negative volume shock means that at least orders have been brought to
the market, and some of the market capitalization may be less. This analysis has a great potential.
First, the transmission level data can be employed to determine the above results are strong in
measurement. The second potential factor is the type of traders involved in a transaction. The role
of open interest and hope that their evidence provides information beyond the involvement in
volume data to open interest to promote further analysis.

Weiss (2009) This paper examines how unusual cost behavioral practices affect the revenue of the
analysts, accuracy of the predictions of the fundamentals of the analysts mainly. Shows that
companies are less likely to earn less accurate analysts than companies with less sticky cost
behavior with more sticky spending behavior. In addition, the investigation shows that the prices
of pricing influence the preference coverage of the analysts and investors seem to have a glimpse
of the cost of companies to partly stake in their beliefs at the cost of companies. The paper
completes the cost management of a specific management accounting research topic, with three
standard accounting three topics (estimating analytics analysis, analysis of market coverage, and
market response in surprise surprises). Despite extensive interest in the offer of analyst’s revenue,

24
pre-research has not yet investigated the relationship between the expenses and features of the
analysts, its essential part in the forecasting income of the non-standing income Prediction sports
expenses. Cost behavior for management accounts is mainly related to management accountants,
this study has got an idea of management accounting for solving investigative queries generally
by financial accountants. Although multi-ideological efforts in literature are very low, the teacher
is pointed out that combining the management and financial accounting perspective is fruitful.
Further research is expected to look at the topics of multi-disciplinary accounting topics.
Integrating management and financial accounting research is expected to be beneficial to both
disciplines.

Homburg and Nasev (2008) This study discussed the cost stickiness, i.e., the manager’s decision
to accept the costs of unutilized resources when sales decline, as a risky project and examine its
impact on conditional conservatism. In this study find that the prices of pricing reduce the income
speed for good news organizations and reduce low income insecurity, and at the same time. Future
research can be examined whether legitimate conservative help reduce the cost-effective
information encouraging. Ready to apply in an income which focuses on an additional concept.
Cost stacking concept is in management accounting literature and accordingly explains a price-
behavior behavior. More specifically, the cost stacking fact is that with a decrease in price and
decrease in SGA, due to low-cost decline, they increase with an equal sales increase. Traditionally,
when sales are explained as ineffective, the SG & A increase sales ratio. The cost affects the current
income of the stacking as well as future income expectations. Our results provide evidence that
the cost barrier affects the relationship of non-income and the cost of its increase increases the
income imbalance. The results show that the market effectively distinguishes between the sticky
entities, indicating that the asymmetry is low.

Kitching, Mashruwala and Pevzner (2016) In this study, investigates review the impact of national
culture on the management decision-making through the lens of cost-effective lens. The recent
study is proof that adjusting resources is due to administrative discretionary costs, which are
"sticky" due to lack of activity than the increase in activity. In accounting literature, how much
differences in national culture affect accounting results and capital markets. The vast and
administrative study of research in this area focuses on the impact of culture, such as consent and

25
acquisition and income management. The study examination has shown that the management
adjustment decisions of stickers in sticky expenses are going on by economic reasons such as
adjustment costs and demands; check the studies' study behavior. In this study discuss and find
that the main dimension of national culture plays an important role in defining these differences,
after controlling other variables known to influence cost strokes. In this study analyze that different
dimensions of social culture define the cross-country variations in the cost of the purchase. This
study finds that the price of this price is very clear that the high uncertainty in these countries is to
avoid, speak, and have long-term orientation. The results are based on two different literatures:
which look at the effects of culture about various decisions through managers and determines the
value of behavior. For the former, study contribute to literature that it shows that there is a form
of management decision about social census adjustment that implies cost-effective behavior. Our
results support the proposal that culture influences resource management decisions and in doing
so, our study plays an important role in understanding the differences in the sticky cost associated
with the whole country.

Nasr et al. (2008) In the context of privatization to make political decisive investigations of cost
of equity value. The terms of privacy are interesting for many reasons. With a sharp change in
property structure, therefore allowing us to read more formally active links between the structure
of new ownership (and therefore the new corporate government) and the new privacy firm equality.
To study this issue, this study provides the review how government control and rescue workers
can influence the value of equality to the political characteristics of the government. This study
finds strong and strong evidence that the value of equity is increasing in the control of government,
while controlling other departments of equity value. This study focusses on government control in
special institutions for two parties. First, after the ownership of the Government, the Corporation
is a major dimension of government structure. Indeed, the most promising transactions in
developing countries, and the most preliminary privatizations in developed countries. The main
prediction is that shareholders will pay less compensation for the acquisition of government control
shares at a private level. Government stability can determine the level of risk after the policy of
privatization. The higher government change policy enhances the possibility of policy. This study
also understand that the value of equality is related to the political system and the stability of the

26
government. Overall, research shows that the equity financing costs of the special institution are
set to control the government's rights and political characteristics.

Bils and Klenow (2004) this study examines the price conversion frequency for 350 types of goods
and services, according to the data bureau of the 1995-97 laboratories. Compared to previous
studies, look at the changes in maximum price change, which have half the prices less than 4.3
months. The importance of price discontinuing is the main question in the economy. Recently
working modeling analyzes business cycle flow or financial policy that companies only need to
adjust the prices of the United Nations. For some prices, a small change in prices, for example,
newspaper prices, men's hairdresser and taxi town change in less than 5%. But some prices often
make frequent changes, more than 70 percent of the changes in the petrol price, tomato, and the
airport. Specifically, durable goods show more changes in prices of compared to consumer
bundles. A sample can be appreciated with the changes in sync fields in the fields to explain the
instability and transmission of the observed inflation rates. Under the pricing of state-related
shocks, specific areas of large area may be harmony. States-based pricing models promise to sell
sync sales, as the required price changes and is usually most commonly used. This study believe
that look at pricing behavior, especially with unchanged prices, the instability and transfer of
inflation for goods should be provided, test testing ground for this model. This study also believe
that the frequency of conversion change dramatically varies across the equipment. Compared to
the predictions of popular sticky price models, the actual inflation rates are more volatile and
temporary for the sticky prices.

Campbell and Shiller (1988) In this article estimate that data on the accounting income is indicated,
when it is committed for many years, helps in future predictions of future profits. The result is that
when the value of the stock is considered itself. From the study estimates it shows how much profit
and return on this index correspond to a simple current value model and allows us first to put a
new light on the claim that stocks with such models Prices are too slow. For predicting profits,
income figures are appropriate consider, because construction by the accountants is made with the
aim of helping to estimate the company's core value. Many financial studies in the series have
avoided the use of income data, and thus analyzed the relevant information about the basic value.
In our point of view, an information is to introduce an average measuring income for variables,

27
years or for many years. An error in the measurement of income is calculated automatically by the
estimation method, which allows the revenue to enter only models because they are useful in
forecasting. The results of this study show that a long average of real income helps predict real
profits. In current stock prices, the proportion of variable income is predictable for a return on
stock, especially when the return has been measured for several years. This study has proven that
facts make stock prices and reject a lot with an existing current value model. It is likely that there
may always be many variables of variables, until the results were changed, and the results were
just changed. However, think it can be argued that a long average income is a very natural variable
to represent the basic value, and there are not many competitors for this character. By adding more
variables, this study can never return to this situation, if the income variable is included. This is
another way to remember our arguments that additional instability is the same as predictable
multiperiod return predictions, that is a prediction once the prediction variable is found that
multiperiod returns are predicted.

Foster and Viswanathan (1993) This study examines the stock market trading volume, trading
prices, and the cost of change in price and the experimental behavior and its effects. On the other
hand, there is a difference in the negative value of the price change in prices within day and day.
Our experimental work shows that the current ideological models based on the negative selection
of market-facing models are widely integrated with the observed pattern of volume-reliability.
This is, the return trading volume is high when the return is more stable. However, this study does
not find, however, significant changes in return of the instability of return. The results of the New
York Stock Exchange test show that the active volume of commercial business volume, negative
election expenses, and the return of return is higher in the first quarter of the day's day in multiple
volumes and interfaces in volatility and inequality. Trading costs are the highest, when the trader
adjusts his transactions to avoid his time, so this study use the estimates of commercial expenses
to determine that from this ideological theory changes with volumes and instability. With more
and more public information on institutions, because these companies are likely to benefit the
informed benefits generally by exposed announcements. Here this study distributes the stock used
in our test, based on one-year trade-based shares, the idea is that more trade-related stocks are
more closely active. The volume is significantly high on the level of importance greater than the
volume, where the main interlay variations are for most active commercial institutions.

28
Gulen and Mayhew (2000) This article, equity index, faces the instability of stock market and after
the introduction of future trading, using different models, as well as dynamic data, instability
Incomplete, and combined dynamic mortar portfolio of index of every country in the 50 countries.
In this study realized that trading in the future is about to increase the inefficiency of the United
States and Japan, but in almost every other country, this study did not have any significant impact
or had to any instability. This determines to the specification model and is set by further analysis
of the relationship between its instability, trading volume, and the open interest in the future of
stock. The increase in the sensitivity of ownership between the property and the worldwide return
is also documented. This study will provide review the features of the time series of stock
indicators that in the 50 countries, the impact of stock index listings and for the initial cash market
to investigate commercial activity. In this study examined this matter in two ways. First, this study
tested for structural changes in future listing time by comparing the features of the series before
and after the return. Second, this study has experienced that in the post listing period the instability
is related to future market volume and open interest. This study realized that in future markets,
markets will help to integrate more with the global market. In summary, after examining the
evidence, this study provides hope the future agreements will strengthen the stock markets in the
emerging countries under the agreement of the new stock index. On the contrary, outside of the
United States and Japan in every country, it appears that there is no significant impact on future
markets or in addition to the lack of stability and integration with the global market.

Schwert (2015) This study investigates the relationship between stock price volatility by the
measure of real and nominal macroeconomic variation, trading activity, financial leverage and
economic activity by using the data on monthly basis from 1857 to 1987. Previously study noted
that stock return volatility was strangely high during the great depression. There is significantly
relationship between aggregate leverage and stock price volatility, also corelated with each other
and little activities in stock price volatility. The largeness variation in aggregate stock variation is
problematic to clarify by using the simple model of stock evaluation, specially throughout great
depression. This paper changes the feature of stock market. Due to the instability of the stock
market, the varieties of different economic variables are incomplete. The stabilization of the stock
market increases with financial gain, as is predicted by black and Christie, although this factor

29
describes only one small part of the change in the instability of this stock. In addition, the volatility
of interest rate and return of corporate bonds is corelated with the volatility of stock returns.
Finally, the volatility of stock market increases during the downturns. However, none of these
factors plays an important role in defining the stock's volatility behavior over time. At the overall
level, the corporate equity value is clearly dependent on the health of the economy. If the rate of
discount is continuously over time, the balance of security prices is comparable to a legitimate
change in the cash flow expected in future. If the data from the economy provides information
about future cash flow or inability of future discount rate, they can help explain why stock change
is temporary replacement "In stock prices, fads" or "bubble" will be temporarily introduced
additional sources.

WEST (1988) This is a summary that interpretation of some literature on the volatility of stock
price that was inspired by Leroy and Porter and Shiller. It seems that small sample discrimination,
rational bubbles, or standard models accurately describe the instability of the stocks for the
expected return. It offers a role for some non-standard models for the expected return. One of the
possibilities is a "fads" model in which new investors naive trading is important. At present, there
are a few direct evidences that such fads stocks play an important role in pricing. This study shows
to consider some non-standard models it may be possible to determine the expected returns.
Assume that the most important direction for future research on the volatility of stock price is still
not a volatility test, but to define additional volatility in the development of parametric models.
Quantity identification in favor of fads is indirectly defined as the uncertainty of stock value, on
the traditional model for bubbles and returns in the form of negative decisions. More direct proof
of fads, and testing of credible credits by fads, may be coming soon. But at present there is a formal
positive proof that nobody gets along with some unsympathetic fads of models.

Harris (1989) In this study investigates the S&P 500 stock price return volatilities are associated
to the instabilities of a corresponding set of stocks, after monitoring for cross-sectional variances
in firm qualities recognized to mark volatility. No significant change in unpredictability is detected
between 1975 and 1983 before the start of trade in index futures and index options. Since then,
S&P 500 stocks have been relatively more volatile. The difference is statistically, but
economically, not important. The current increase is mainly in daily returns and the maximum

30
return on long term return returns. In addition to the start of unusual trade, other factors may be
responsible for a small increase in the problem. Large trading activity is likely in common
agreements. Benefits and specialties in options are often accused of stabilizing cash markets.
Recent evidence shows stock variables that are strictly linked to trading session hours in increasing
these concerns. Unfortunately, theoretical analysis is whether the unexpected trade rejects cash
markets or depends on what can be considered. These results are consistent with the idea that cash
market in the future of the index and trade or / index option increases the stabilization. However,
an alternative description can be obtained, which can consider average positive serial touches
observed in the changes in daily stock prices. Positive serialized correlation is surprising since
bid/ask bounce and discreteness add negatively serially correlated variance components to daily
price changes.

Chari, Kehoe and Mcgratta (2014) In this study, to understand the exchange rate conversion to
work by Dornbusch (1976), it is that they interact with financial shock and sticky prices. However,
however, some researchers have tried to develop commonly balanced models in the volume of this
story. Here, this study did, some success. In our common equity financial model with sticky prices,
if the risk is higher and preferences in preferences are different, the model can lead to the instability
of real conversion rate. With barrier at least one year's price, the model also produces a real
exchange rate, which is consistent with the data, but is less. If financial conflicts are attached to
the entire country, then the overall model of the entire country is compatible with the data. The
main difference between models and data is that this model produces a high touch between the real
exchange rate and the ratio of consumption across the country. Such frictions as a trade dispute in
sticky prices, sticky wages and equipment markets have no role in breaking this link. This study
also showed that the most widely used form of asset market failure and continuous position of
habit may not end. Basically, the International Business Cycle Literature, all models in the original
and designated, is either the full market or the incomplete markets here. The analysis shows that
this model will analyze the disapproval - real exchange rate. To end it, future investigations should
focus on adding rich forms of market friction.

Hall (2015) Resulting a depression, the cumulative labor market is slack-employment stands under
ordinary and employing efforts of owners, as investigating by the support needed marketing and

31
positions, are short. A model dealing with a job describes the labor market's quality responses to
shock, but accounts for the intensity of the flow observed to attach large shakes. Modeling
sensitivity increases driving strengths involved in stacking. Create a new model of such a way that
the wage imports unemployment. Strategic economic equality is created and controls the condition
that a worker's employer does not have a fair opportunity for mutual improvement. Sticky wages
are not interrupted based on efficient work, nor the loss of ineligible jobs. In this way, the model
has already provided the basic criticism that is already based on the sticky model of the
fluctuations. The station is possible, as it is only to the extent where the thickness and retention of
the labor does not have an outstanding effect. The result of the matter between the worker and the
employer is to be defined primarily and the requirement for its fulfillment is a competitive election
mechanism. The barrier can be interpreted in terms of a labor condition, which provides balanced
election function. The wage-tracking model has developed as a competitive selection mechanism,
as a standard of prediction in a respective manner that the wage never comes out of the, bargain-
set-but the wages of the wage Determination is permitted for the mechanism that matters in
business. Model in sample can be directed by evidence about the determination of the original
wage, because the theory is permissive in terms of bargaining set.

Edwards (2014) in this study, on every occasion the high market is incomplete, the trend is blaming
that whatever is going on new at the time. In recent years, one of the most extraordinary
innovations in financial markets has increased the growth and promotion of equality. It is very
surprising that the future of the equity index in the future has been promoted as a potential cause
for the current market's instability. However, despite focusing on recent events, most of the
evidence is to ignore. Equity futures started trading in 1982, so there is a huge amount of data for
use in this test that fiscal future trading has increased the cash market inefficiency. By date, this
proof does not support that the market has been stabilized with the promotion of stock index. The
volatility of the day's price of the stock market increased the period of 6 years. In May 1987, it has
not been pointed out that the stock price has increased in the absence of future trade. In fact, before
the launch of the future before the market in S & P 500, the market was maximum in 1973-82.
Although there is evidence of future shortage deficit, as in the days of the end of the future contract,
this instability does not continue for a longer period.

32
Franklin and Edwards (1987) Today it is widely believed that uncertainty and financial risks are
still far more than 1920. Stock prices, interest rates, and exchange rates: Financial risk and
uncertainty are generally associated with the prices of more volatile financial assets. Recently,
their prices have a lot of daily movements that attribute any new information. Stock prices carry
great tricks, for example, the above instances have changed in the following hours. These
associations have defeated investors in the growing uncertainty about the future and about the
future value of the assets. It is a clear idea that the risk of insecurity and financial assets has
increased. Several specifications were presented to explain the increased increase in instability.
There is an expectation. In financial markets, it proves that there is more unexpected activity than
before in the past, and this activity is on pure stability. Flats are not economically converted (or
the changes they expect) in assets, but not in large, professionally organized, commercial business
programs. "The trend of trading" “Triple Witching Hour” in the stock market is an important
example. This belief proves that large and large shares of financial asset trading are done by a few
professionally managed organizations and these institutions are often the pursuit of trading
strategies that sell or sell them together. Another explanation is the revenue of future markets that
it has been alleged that the markets have improved theoretical action which, has weakened cash
markets.

Stien and Stien (1991) this study investigates the stock distribution rises when the price follows
the spread process with isolated parameters at different levels. In this study use analytical
techniques to get a clear off form solution, where instability is reported by processing mathematics.
This study applies the results between two relevant issues in finance literature, optional pricing in
the world of sustainability, and the relationship between stabilizing stability and the share of
distribution of stocks. Two studies are used as the principal source for parameter value, (Stein,
1889) and (Merville and Pieptea, 1989). Instead of relying on the stabilization of stock estimates,
both study options are used to be instantly used as their data. Former focus on the S & P 100 Index,
while later, is mainly looking at 25 individual stocks. Although our anticipated technique works
relatively well in pricing options, it may be useful question that the right formula can be applied
easily. However, it should be noted that our basic estimation methods can be helpful to attack more
common models. Our results help us to form a closed form options pricing formula, which can

33
include the key aspect of the time-series features of the automation, and then clear the link between
the series’ features and the limit Until the stock price.

Koutmos and Booth (1995) The price and impunity of transmission mechanisms in New York,
Tokyo and London stock markets are investigated. Temporary effect of broadcast news (market
view) and bad news (market deficit) are described by the expanded multifunctional obligated
Exponential Generalized Autoregressive Conditionally Heteroskedastic (EGARCH) model. Use
the open daily to close the returns, this study will get a strong evidence that the spread of a market
is very clear when the trade is bad to the last market. Before and after the October 1 incident, it
shows that there has been an increase in touch and interaction in three markets. The subsequent
accident is visit that the maximum number of people in national markets. Despite extensive
investigations and interrogations of major markets, there is no attempt to investigate the
possibilities that the quantity and quality of the markets can determine the importance of the level
of insecurity. Negative innovation in the given market is better than the posterior innovation in the
next market. These results show that stock markets are sensitive to news in other markets,
especially when news is negative. At least and later the crash shows that the stock market in New
York and London has become more sensitive to the early innovation in Tokyo.

Faff and Loudon (2010) During the 1992-2006 tour, this study documented using an outstanding
GARCH module approach in return and supply of equality between equality and bond markets in
Australia. The low bond market returns to the negative bond market, while good bonds are created
in the equity market. The instability in bond market increases in equity market but reverse is not
true. Inequality of equity bonus, the immunity of transmission equity depends on a complex path
on the related signs of return to each market. Supply effects between equity and bond markets
occur when the transfer of information between these markets is neither completed nor completed.
Affect the prices of equality of economic news that generates unexpected fall in bond prices. If it
indicates that corporate cash flow will be lower in the future, therefore higher interest rate is
expected to prevent economic growth. From the examination, our tests can be strengthened using
daily data in our exams. Since suppliers are expected to transfer to competitive financial markets,
short-term effects can only be found in ultra-high frequency data. Such figures will also help in
determining the impact of different adjustment speeds on spacious effects and their asymmetries.

34
Bala and Takimoto (2017) This paper investigates the supply of raw retirement products in
emerging and developed markets through the model of multivariate-GARCH (MGARCH) and its
various types. In addition, this study analyzes the impact of the global financial crisis on the issues
of stock market insecurity and amend the BEKK-MGARCH-type models that face a financial
crisis. Massive results show that relations between emerging markets are less than the growth
between developed markets and the increase in financial crisis. This study also finds important
aspects of development in developed markets, whereas weak identities have been detected for
emergency markets. This study understand that the time of both stock rectitude’s and non-
conditional covariance matrix is different. This means that when time changes are ignored, the
variable and contact is high. This investigates also believe that previous shock plays an important
role in the durability of the EMS in the absence of DMS. This shows that the market is more
advanced, impacts less, its own past shock. This search is financially affected and can help guide
investors in their investment decisions. This result of the supply effects between the stock markets
can highlight the implications of the stock market and the impact of financial crisis on the touch.

Jebran et al. (2017) This study has a temporary effect on Asian emerging markets in the post of
financial crisis and posting. Investigations of Asia's incomplete markets China, Pakistan, Hong
Kong, Sri Lanka, and India. Expansion of atomic instability in stock markets is examined using a
wide EGARCH model. Results highlight some key results. However, the instability spillover is
turning between stock markets of Hong Kong and India's stock markets; in crisis-related periods
before Pakistan and India, while in the crisis-related period of Sri Lanka and Pakistan's stock
markets. Integration in Asia's emerging markets has significant impact on investors and policy
makers. Stock market gets more connected to the crisis. Additionally, feel that negative shocks
created more instability than the positive shock of this intensity. This study has some major effects
for investors, policy makers and corporations. Offer potentially diverse opportunities for
integration investors in financial markets. Investors can design their investment strategy by
considering the integration of various financial markets. Additionally, policy makers can be
considered as an important trend on the integration of financial markets because the financial crisis
prevails from a market to another market and has affected the financial performance of the markets.

35
Xu and Sim (2017) Recent studies on the cost of behavior have proved that due to the expansion
of business due to the expansion of business, the cost of a business is less than the reduction in the
business. This cost of sticking behavior agrees with the traditional ideological idea that the cost
level and size of the business turns into a linear way. This article investigates the existence or
absence of stopping the use of samples of China manufacturing listing companies. First, results of
this study show that the backwardness of the cost is a wide range of trend and maximum in
manufacturing industry. Second, find that the cost of this cost is very different in different
industries and different areas. Lastly, this study find that the backwardness of his cost is affected
by economic growth. Especially, cost of stabilization increases with economic growth. the results
from Chinese manufacturing listing companies provide evidence on the unusual cost behavior and
consists of both major impacts of login accounting research and financial accounting research. The
purpose of this article is to analyze the cost of stacking and cost discrepancy by analyzing the
vector change in terms of participating prices and sales income using manufacturers. Finally, the
impact of large-scale economic development on investment management in different industries,
the government should actively adjust industrial policies to speed up the development of China's
central and western regions.

Banker et al. (2014) Due to lack of sales, the increase in sales is lower than the growing number
of sales. This study understand that the elastic variable associated with it has a significant impact
on the standard altimeter dimension model. In the direction of sales change in Basu (1997),
significantly reducing conservativism has been reduced and on the surface of the industry, there is
a lot of impact on the conduct of ideology and conservative drivers on industry level. Future
experimental research on conditional conservative should be controlled for the possible sore effect
of sticky expenses. Conditional conservative means that bad news (which is a minor proxy
negative stock return) is well recognized in good news and indicating maximum revenue
(indicating positive returns). Therefore, the income between stock and stock retirement should be
strong for negative returns than positive returns. More importantly, this study finds the standard
model error variations in the stacking of the defender for the change in the economy; a potential
on comparative ratings of conservative estimates at the control industry level for cross section
differences in the sticky cost. The effect Many studies get results according to this prophecy and

36
prevent the presence of conditional conservative. Apart from this, the impression of sticky
expenses is an important factor in considering the future study of conditional conservative.

Zonatto et al. (2018) Expenses are high when the activities still go ahead. Business spending
behavior needs to be controlled and managed, so during security crisis or during the boom hours,
the ability to compete competitively. Nevertheless, some studies are devoted to assessing the
impact of economic growth on the behavior of spending. This study mentions the impact of
economic development in the sticky spending behavior of companies in the UK, prosperity and
arm period. Research population comprises companies listed in Brazil, Russia, China and South
Africa's stock exchange. The study period was 10 years, in which quality has been set up to reflect
the impact of economic growth in the behavior of companies during standard development and
impact. Consequently, the costs are estimated that there are exceptional practices in some accounts
and vary from companies related to different economic environments in break countries. This
evidence supports the outcome that extraordinary spending behavior differs between Brooks,
indicating that the expense costs, business, levels of non-standardization between the various
industries and countries are managed differently. It was said that the increase in cost of economic
prosperity is lower than the response to the changes in demands in that ratio. In the economic
mission period, spending increases is lower than its growing number.

Dierynck, Landsman and Renders (2012) This study investigates the effects of editorial advertising
to beat the zero income standards on the behavior of laboratory, labor private companies. This
study promotes its positivity that companies of the companies will be identified to identify healthy
profits, managers or zero markers, labor costs will increase a bit when the activity will increase
and when workers the cost will be reduced. The companies should look at the cost of a more
consistent laborer who reports small profits. The results are according to this prophecy. Using
Detailed Employee Statistics, this study focusses on making the organizations' administrators a bit
profitable to shoot employees who are relatively low prices for fireplace. To protect their
reputation in Labor Market, employees of other organizations, particularly those employees by
reporting hours of healthy profits, limited expenses, and implementation of activity changes of job.
However, the main purpose of this paper was to manage whether management preference should
influence the cost of behavior, and it needs a specific institutional layout. Future research can be

37
examined whether our results replicate with other settings of other organizations, with other types
of emotions and other expenses. Additionally, the managers decide that managers can influence
the level of their costs, are not limited to the recovery and firing process, and can limit the number
or increase of the per employee's hours. This study leaves future investigations in which the
manager uses other tools, such as bonus determining and promoting, to affect labor costs.

Givoly and Hayn (2000) This paper document changes the pattern of income, cash flow and
accounts in the last four decades. In the absence of generally accepted acceptance of conservative,
many steps of traditional reporting have been identified and checked. These steps depend on
incredible accounts, bad and good news about income, income sharing features and market
proportion. Consumption with sampling time are compatible with financial reporting. The results
are articles for standard configuration, financial information regulation and financial statement
analysis. This study enhances this research body by analyzing the relationship between income
and cash flow to identify structural changes in the accounting reporting system. Specifically, the
study test whether reporting of change in changes in time, cash flow and time-to-time changes is
consistent with conservative. Therefore, in recent years neither can the investment of these
investment levels nor the significant deposits of negative accounts have been added. In this way,
consolidation of stable conservation by this study indicates the books 'from the books of
institutions' in addition to the conservative effect on financial statements that prevent financially
prevented from investing rapidly.

Neto et al. (2011) The profit or loss of investment can be appreciated by market movement. This
movement can be estimated by the difference between the rise of two stock prices in different visits
and this difference can be used to calculate markets' instability. Properties of market change
sensitivity temporarily in the world economy. Traditionally, market movement is a possibility of
density function analyzed using the rules of electricity. The part of this work is two-fold: (i)
analysis of world market index is performed using a dynamic two-year-old window time data In
this case, the experiments show that there is a of instability Perform better in all range from
powerful rules; (ii) Then, this study will provides review the relationship between the stabilization
and capacity of markets Maxwell Boltzmann potential function based on the ideal gas theory.
Results show an interconnected relationship between the stagnation and the passage of passage

38
function This information can be used, for example, to predict future behavior to analyze the
economic patterns for clustering markets or markets.

Kanasro, Rohra and Junejo (2009) This paper examines the availability of instability in Karachi
Stock Exchange (KSE). Autoregressive Conditional Heteroskedacity (ARCH) and Usually Used
introduced by the Generalized Autoregressive Conditional Heteroskedacity (GARCH) Engle
(1982), Bollerslev (1986) and Nelson (1991). The data from the KSE website is derived from the
State Bank Pakistan's analysis is with use of Minitab, excel and other computer packages. In this
paper, two indexes have long-term data analysis; 'KSe-100 index' and this was used for the first
time in the emerging stock exchange. Confirm the presence of experimental result during the high
instability study period in Karachi Stock Exchange. Developing economies are very enthusiastic
in their financial markets, and many other factories, prices have high instability, which are also
considered as high risk or uncertainty, is a major factor in stress capital from markets. Due to this,
the investors get scary and run away from the market. Although this market is not incredible, but
due to high instability, there is a risk of 'accident' in the stock market and individual security prices
create a high instability in high instability and it can reduce prices and attachments back to the
bottom.

Peiris and Peiris (2011) People must consider the stabilization as a hurdle in the market, because
securities prices are not being paid significantly and the capital market does not work execratively.
Changes in the failure of the stock market to be inaccessible to risk-linked investors and significant
negative effects on the economy, so many researchers have studied the implications of the stock
market and its impact on the economy. Sustainability of a series in a fixed time series is due to the
various micro and macro-economic factors associated with this security. In this study, the Colombo
Stock Exchange (KSE) examines the stabilization of different fields and using monthly data related
data in 20 economic sectors, Autoregressive Conditional Heteroskedasticity (ARCHCH) and
Generalized ARCH (GARCH)) affects temporary economic factors. KSE results for a period of
2005-2010 have been found that KSE is one of the main factors in the twenty-two sectors. The
stabilization of the total stock of unusual fields was again emphasized on the rate of mini-supply,
Broad Money Supply, Infection and Interest. It was found that inflation and interest rate impact
large economic factors on the emerging economy of Sri Lanka's emerging economy.

39
Givoly, Hayn and Natarajan (2003) The paper has examined the strength and reliability
measurement of diagnostic balance (DT), developed by Basu (1997) to determine the traditional
reporting. This study recognizes the specific features of the information environment that belong
to conservative that affect the DT measurement and find out that in the content of the news during
the inspection, the types and uniform types of uniforms. The extent of the event is sensitive to the
extent of the degree. Disclosure policies. According to our test, original and artificial data, it
indicates reporting is needed to determine the extent of conservative, need to recognize and control
these features. This study also understands that during the reporting of good news about corruption,
the difference could be more obvious than previously reported. In addition, this study provides
additional evidence on negative associations between DT measurement and alternative aspects of
conservative, to determine the overall conservation of a reporting system (aggregates, countries or
time). Special balance wrong variations on any scale.

Pandey (2003) The estimate of this study is measured in the same period as "volatility realized"
compared to a typical, 5 days and a month period according to different estimations and conditions
of conditioned instability. In this study use high frequency data for three years (1999-2001) five
minutes rectitude’s to take steps to understand. To gauge the quality of estimations and models to
predict stability, this study compares the estimation of unconditional estimates that are measured
in the same period with measurable measuring in the next period. For the model of a condition of
non-durability, the model is estimated from the timeline to predict prediction for the same period.
Our outcome indicates that when a non-compliance model provides low talent estimates, highly
estimating estimates have more effective estimation. If models and estimator predictions are
concerned, the models of conditional instability are extremely inconvenient for five fast (weekly)
or monthly instability predictions. On the contrary, in addition to the estimation of Parkinson, the
estimator's estimator performs relatively well in the instability of prediction on these prospects.

Amskold (2011) The main objective of this study is to evaluate and compare different temporary
models. It is based on evaluation that the models are showing the implicit instability of different
stock options. Taluka will be studied three different times. The model of instability is based on the

40
daily deviation of reliable instability and the imbalance of sampling on daily basis. Measurement
of research data means absolute deviation and R2. Examples of historical models are historical
instability, a pattern model and a model where the reliability of an index based on the assets and
index's historical returns is fixed with a scanning factor. The investigation shows that the scanning
element model performs better than other models, but it also shows that it may be better to use the
index's durability, instead of a temporary model instead of scanning without. For historical models
it shows that 50 to 75 hits are the most suitable to use for copying reliable instability. It is difficult
to measure the model performance of GARCH, because the result of the model is different. It has
also been concluded that a few observations of extreme absolute returns may increase the
maximum of GARCH's instability.

Calleja, Steliaros and Thomas (2006) Current research on cost behavior suggests that the increased
number of activities increases with the increase and reduces response to less activity. This sticky
cost behavior combines traditional patterns, which assumes that costs are estimated due to the
increase in activity and decrease in expenditure. Using samples of US, UK, French and German
companies, this study know that operating costs are sticky in response to income change;
Temporarily operating costs increase, earning approximately 0.97 percent per cent in revenue. But
the revenue decreases by 1 percent per cent only 0.91%. French and German companies are more
than the cost of the UK and US companies; this study investigates that the result is worth the
difference in corporate governance and administrative surveillance systems. Expenses have long
been sticky on horizontal horoscope and when companies lose significantly in revenue. Firm
specific and industry features also affect cost level.

Noreen and Soderstrom (1997) In this study discussed over-head cost behavior on time-series. In
this study examine that more efficient forecasting of variation in costs are usually created by
presumptuous a price determination not transformation at all (assuming of inflation) than by
pretentious that the price will transformation in percentage to transformation in the action. This
study also invention that approximately all the consequence of variation in action on costs give the
impression to happen in this similar year at the transformation in movement. To conclude by means
of a numerous period reversion model, this study examines the percentage of inconstant prices in
hospital overhead interpretation is deceptively identical retiring. These consequences display that

41
price arrangement, such as action cost constructed appraisal, that accept costs are comparative
activity, will exceptionally overvalue appropriate, overhead cost for policymaking and
presentation assessment determination.

Penman and Zhang (2002) There is a change when a protector makes a conservative accounting.
Its investment amount can affect the quality of its income. In this paper develop investment income
decreases and produces reserves. To reduce investment these reserves release, increase income. If
investment change temporarily, then the current income is temporarily depression or regret, and
this is not a good indication of future income. This study creates diagnostics this joint impact of
investment and conservative accounting. This study finds out that these steps predict future returns
on net operating current Return Assets on Pure Operating Assets. Also, these steps the forecast for
stock return also shows that investors do not appreciate how conservative and investment changes
are in increasing questions report revenue quality.

2.6 Hypothesis Development:

H1: There is an insignificant impact of cost stickiness on stock price volatility.
H2: There is an insignificant impact of CONSER on stock price volatility.

2.7 Conceptual Framework:

Independent variables Dependent Variable

Cost Stickiness Stock Price Volatility

2.8 Research Gap:

The existing literature which discussed as above, have enough evaluation on intensity of cost
stickiness and stock price volatility, Brief review of existing study explain the impact of cost

42
stickiness on the price of stock. Therefore, many research studies focused on cost stickiness and
stock price volatility but most of these studies conducted as management deliberate decision about
cost behavior and disclose transparent information so that investors protect from any loss and high
volatility. In Pakistan there is limited work have been done on stock price volatility but not as the
cost stickiness impact on stock price volatility, so this is a rare work in Pakistan. This study
provides a great understanding about the effect of cost stickiness on stock price volatility for
Pakistani businesses.

43
 Chapter Three: Data and Methodology

3. Introduction:

This chapter discussed the population, sampling, data collection, analysis procedure and
techniques and discusses the description of variables of this study.

3.1 Study population and Sampling:

In this study sampling process used to explain the specific problems attended the whole population.
For effective and successful research, sampling process is very important which helped for the
analyze the results of sample for whole population. The sample size that is selected for this study
has important impact on findings and results of research efficiently. The size of the sample may
affect the results of this research. Calculation of sample size regulates that which size of sample is
required to avoidance from these kinds of problems. Accurate process of sampling shows an
important role for the effectiveness and success research and helpful for the analysis of results in
whole population. The following points explain the detail of population and sample which are
required for study.

3.1.1 Study of population:

Population is a collection of subjects (such as countries, individuals, institutions, groups, region,
cities, nation etc.). It is existing and only if its subjects can be prohibited from other subjects that
belong to many populations (Plumper and Neumayer, 2012). One case is the same topic that can
be perceived more than once. Pakistan Stock Exchange is the stock exchange of Pakistan with
trading floor in Karachi, Islamabad and Lahore. Pakistan Stock Exchange was reclassified as a
MSCI (Morgan Stanley Capital International) Emerging Markets in May 2017, while the FTSE
(Financial Times Stock Exchange) classifies as secondary Emerging Markets. Pakistan Stock
Exchange came in to being 11 January 2016 after the merger of Karachi, Islamabad and Lahore
stock exchange. Pakistan Stock Exchange plays a vital role for the development of country and
evaluation the funds of primary market and trading of securities in secondary market through long
term facilities and provides opportunities for investment by different resources. Two sectors in

44
Pakistan Stock Exchange, (financial sector and non-financial sector). Non-financial sector deals
with the trading and manufacturing activities, nonfinancial goods and services like sugar, cement,
textile and food as market products. Non-financial sectors not dealing with financial related
activities (lending and borrowing). Non-financial sectors play an important role for the
development of economy in Pakistan. The study of population contains on non-financial sector
companies listed in Pakistan Stock Exchange and population is 450 companies.

3.1.2 Sampling:
A sample is a subsection of population. Samples can be a selection of or randomly. For right
random sample, all interpretations of the population essential to have an equal a preceding
possibility of existing drawn into the sample. Sampling is the faster data collection and at lower
cost. Sampling technique for data collection used in every field (Plumper and Neumayer 2012).
There are two types of sampling technique based on data collection one is Probability sample and
the second is Non-probability. Probability sample is random selection that all units in the
population have equal probability while choosing. Non-probability is the process for the selection
of sample from population without random sampling or using statistically theory (Ishtiaq, 2015).

Figure 3.1

45
There are further types of non-probability and probability sampling.

Method of Sampling

Probability Sampling Non-Probability Sampling

Simple Random Sampling Quota Sampling

Stratified Sampling Convenience Sampling

Cluster Random Sampling Purposive Sampling

Self-Selection Sampling

Figure 3.2

Convenience sampling used in this study for analyze the data. Convenience Sampling is a specific
type of non-probability sampling that depend on data collection from population where the
members who are conveniently available to practical study (Saunders, Lewis & Thornhill, 2012).
Following advantages of convenience sampling as under:

 Ease of sampling and the ease of investigation

 Helpful for experimental studies and for hypothesis test
 Facilitate of data collection in short time
 Alternate sampling methods and Economical to implement

46
In this s research only, non-financial sectors are selected that are listed in Pakistan Stock Exchange
(PSX) and financial sectors are excluded because of altered economic recording. Through
sampling data collection is very easy and time saving. Data take 300 companies as sampling in our
research out of 450 companies.

3.2 Data collection:

This section describes the data collection. Two ways use for data collection one is primary data
and second is secondary data.

Data

Primary Data Secondary

Data

First Time Data

Collection Existing data

Figure 3.3

Primary data is the first-hand data, data collect for the first time such as Questionnaire, Interviews
and observation etc. primary data generally collect first hand, this data may inappropriate (ishtiaq,
2105)
Secondary data means data collected from different ways (papers, websites, companies’ profiles,
financial statements, libraries newspapers, magazines) etc. known as secondary data, or which data
already available. secondary date is used in this study because t secondary data is easily available
from internet, websites, Survey reports of various local and international surveyor organization

47
and company profiles to recognize the impact of variables. To indicate the relationship of stock
price volatility and stickiness of cost and to investigate the accounting conservatism (operational
accruals) different sources are used to collect secondary data from annual reports of non-financial
companies that are listed in Pakistan Stock Exchange and the data of cost stickiness in collect from
the Pakistan Stock Exchange website (Business Recorder Historical Data) for the years of 2012 to
2017. Financial data attained from annual reports of companies. Following condition are used to
select the statistical sample from statistical population:
The active companies in Pakistan Stock Exchange whose related data available for 2012 to 2107.
Companies that are not investing and insurance companies.

3.3 Data Techniques and Analysis Procedure:

Types of Statistic Analysis

Descriptive Analysis Inferential Analysis

Mean Hypothesis Test

Range Estimation

Standard Deviation Cor-relation

Figure 3.4

48
3.3.1 Descriptive statistics analysis provides the picture of whole data and presents the data
in arranged and easy way. Descriptive statistics is term analysis of data that helps to define, display
or summarize the data, for example, patterns force develop from the data. Descriptive statistics of
research variables measured by central tendency such as mean, median, and measurement of
dispersion as (standard deviation), min, max, skewness, and kurtosis uses. In descriptive statistics
two collective method standard deviation and mean are used to identify the features of data
collected. Small vale of standard deviation indicates the mostly observation is closely to mean.
Large vale of standard deviation indicates that the mostly observation circulate to mean. For
Descriptive analysis mean and standard deviation used to analyze the dependent and independent
variables.
3.3.2 Inferential statistics
Inferential statistics takes data from a sample and makes implications about the greater population
from which the sample was strained. Because the aim of inferential statistics is to attraction
assumptions from a sample and simplify them to a population, there is need to have assurance that
our sample correctly reproduces the population. (correlation and regression) tell about the
association or relationship among variables.
This requirement affects our process. At a broad level, must do the following:

 Define the population that’s is studying.

 Draw a representative sample from that population.
 Use analyses that incorporate the sampling error.

There is no easy to pick a convenient group. Instead, random sampling allows us to make sure the
pattern represents the population. This process is a fundamental way to get samples that ignore the
average population level. Random samples make statistics, for example, it does not mean too much
or too low. By using random samples, we can normally generate a wide range of patterns by
sample. Unfortunately, it really can be complicated to submit randomly samples.

49
3.4 Research models and description of variables:

3.4.1 Dependent variable:

3.4.1.1 Stock Price Volatility:
Stock Price Volatility is measure by change in the market Price of each year and previous year.

P = (Pit – Pit-1)

Stock Price volatility is measured in another way:

P = (Pit – Pit-1) / Pit-1

P = Stock Price Volatility

Pit = Stock Market Price of Current Year ith
Pit-1 = Stock Market Price of Previous year

High volatility in the stock market is a long discussion amongst the market experts and
academicians. Fama (1965) & French (1980) investigated and concluded that; volatility caused by
trade itself. It means greater the level of trade volume, greater the price movements. Bessembinder
and Seguin (1993) find that an asymmetrical volatility is due to response between volume and
price. French & Roll (1986) studied volatility and their results show that volatility is higher during
trading hours. It is also argued that volatility is driven by trading volume followed by arrival of
new information regarding new floats, or any kind of private information that incorporate into
market stock prices. The stock market volatility caused by number of factors such as; credit policy,
inflation rate, interest, financial leverage, corporate earnings, dividends yield policies, bonds prices
and many other macroeconomic, social and political variables are involved. Amongst the literature
of most relevance to the whole volatility issues is ‘Market Volatility’ of Shiller (1990) is a firm
advocate of the popular model explanation of stock market volatility. The popular models are a
qualitative explanation of price fluctuations. In short, it proposes that investor reactions, due to

50
psychological or sociological beliefs, exert a great influence on the market than good economic
sense arguments.

3.4.2 Independent Variable:

3.4.2.1 Cost Stickiness
Sticky of the costs is suggestive of the component, when income level is increased then increase
in rate of the selling costs, when income level is decreased, then decrease rate of the costs. This is
known as costs stickiness. The largeness of changes is only depending on changes in activity
volume and direction of changes in activity volume has no effect on the largeness of changes in
costs (Asadi and Abdoli 2015).
The main purpose of this research is studying the behavior of each finished cost elements of sold
good and sale costs, general and administrative costs and their effect on the cost stickiness in the
firms. elements of finished costs (including production factor costs i.e. direct material, direct wage
and production overhead) has no stickiness. relative to ale variations; but sale costs, general and
administrative costs have stickiness relative to sale variation (Chen, Lu, and Sougiannis, 2012).
They show that empire-building managers increase selling, general, and administrative (SG&A)
costs rapidly when sales rise and decrease these costs slowly when sales fall. That is, empire-
building incentives generate cost asymmetry, implying a positive relation between an agency
problem and the degree of SG&A cost asymmetry. Cost stickiness as refer to the Selling, General
and Administration. Anderson model (2003) used to show the cost stickiness in this study.
Anderson, (2003) found that the absolute values of the rate of decline of selling, general, and
administrative (hereafter, SG&A) costs seen when sales decline are smaller than the absolute
values of the rate of increase of the SG&A costs seen when sales increase.

Model used in this study, and several researchers used this model to investigate the behavior of
costs toward selling level changes in income increase or decreases over a duration of time
(Anderson et al. 2003).

51
log 𝑆𝐺𝐴𝑖,t =𝛽0+𝛽1𝑙𝑜𝑔 𝑠𝑎𝑙𝑒𝑠𝑖,𝑡 +𝛽2∗𝑑𝑒𝑐𝑟𝑒𝑎𝑠𝑒_𝑑𝑢𝑚𝑚𝑦𝑖, 𝑡
𝑆𝐺𝐴𝑖, 𝑡−1 𝑠𝑎𝑙𝑒𝑠𝑖,𝑡−1

∗𝑙𝑜𝑔 𝑠𝑎𝑙𝑒𝑠𝑖, +𝜀𝑖,𝑡

𝑠𝑎𝑙𝑒𝑠𝑖,𝑡−1

𝑆𝐺𝐴𝑖, 𝑡 = administrative, public, and selling costs of ith company in period t.

𝑠𝑎𝑙𝑒𝑠𝑖,𝑡 =net selling of ith company in period t.

3.4.2.2Accounting conservatism: conservatism of ith company in year t is calculated by

Givoly and Hayn (2000) model using the following formula:

𝐜𝐨𝐧𝐯𝐞𝐫𝐬𝐚𝐭𝐢𝐬𝐦 𝐢𝐧𝐝𝐞𝐱 = 𝒐𝒑𝒆𝒓𝒂𝒕𝒊𝒐𝒏𝒂𝒂𝒍 𝒂𝒄𝒄𝒓𝒖𝒂𝒍 𝒊𝒕𝒆𝒎𝒔

𝒔𝒖𝒎 𝒐𝒇 𝒂𝒔𝒔𝒆𝒕𝒔 𝒊𝒏 𝒕𝒉𝒆 𝒗𝒊𝒓𝒔𝒕 𝒑𝒆𝒓𝒊𝒐𝒅 ∗ (−1)

This model is calculated by above formula. These lines depict the behavior over time of
components of total accruals (other than depreciation), specifically &operating' (or &working
capital') accruals and &nonoperating' accruals. Operating accruals are those arising from the basic
day to-day business of the firm (Givoly and Hyan 2000). They are defined as:

Operational Accruals= Account Receivable + Inventories + Prepaid Expense

-  Account Payable – Tax Payable

3.4.3 Control Variables:

A control variable is a constant (Scientific experiment) or experimental element which is remains
constant or unchanged throughout the course of investigation. Control variables strongly effects
investigational results, not held constant during the testing to examine the comparative association
of the dependent and Independent variable. The control variables are not of primary interest to the
experimented.

52
3.4.3.1 SIZE it:
Size of the Company is measure by the Market Value Logarithm.
When any business or organization market value low then the share price of the company also low
in the market. On the other hand, when the market value high then the stock price of the company
also increases.
SIZEit = Market Value Logarithm

Furthermore, Company Size is measured by the Total Assets Logarithm, but in this research
Company Size is measured by the Market value Logarithm, and Market Value is obtained by the
No. of Common Share is multiple by the Share Price or Market Price.

MV= No. of Common Share * Share Price

SIZEit = Total Assets Logarithm

3.4.3.2 LEVERAGE:
Company financial leverage is measure by:

Leverage = Total Debts

Total Assets

When the leverage level of the company high then company can borrow large amount of capital
in the company, due to this the no. of shareholders increase as well as share price of the company
also increase. On the other side when the company leverage level low then company not borrow
money, due to this the no. of shares also decrease and share price down.

3.4.3.3 Selling Growth (SG):

SG selling growth is obtained by the change in this year sales divide by the previous year sale.
Company that has high sales growth capacity might to increase the stock price which is profitable

53
for the investors, which can deliver them with better facility to manipulates. By means of
increasing the sale, a firm can increase its revenue.

3.4.3.4 Market to Book Value (MtB):

MtB is the market to book value ratio., that is measured by the division of the market value (MV)
on the Book Value (BV). Market Value is calculated by the share price multiply by the No. of
Outstanding Shares of Common Equity. It is a financial valuation used for the evaluation of the
current share price in the market which is comparative to the book value of a firm. The book value
is a value report in the balance sheet of a company such as the assets of the company. Moreover,
it is a ratio which is used for the density the assets of a firm which are presented in relative to the
stock price.

MtB = Market Valve / Book value of Common Equity

If market value high but book value low then the company gain profit, because actual price of the
stock increase in the market but book value low recoded. On the other side when the market value
low and book value highly recorded then the company face loss, because actual price low and book
price high recorded.

3.4.3.5 ROA (Return on Assets):

Return on Assets (ROA) is measured by the division of Net Income on Total Assets of a firm.
Total assets are the resources of the firm. ROA designate that how a firm used its resources (assets)
capably and effectively for the profit. ROA indicate the performance of a firm. This ratio is also
measured by another researcher the net income before tax divide and dividend by the total assets.

“Assets (ROA) a business stays a pattern what way gainful returns relative to its total assets. Using
its assets to produce proceeds ROA provides a knowledge as to in what way effective organization.
Designed by in-between the yearly revenue of a corporation by overall properties, ROA is shown
as a proportion. Occasionally mentioned to as “return on investment”

ROA = Net Income / Total Assets

54
3.4.4 Description variables:

P = β0 + β1 COSTSTICKYit + β2 CONSERit + β3 LEVit + β4 MtBit + β5 ROAit + β6 SGit + β7 SIZEit

+ ɛit
DV=P
IV= STICKY, CONSER
CV=SIZE, LEV, MtB, SG, ROA

Variables DESCRIPTION
P Obtained by the difference of market price of each year from the previous year
STICKY evaluate by model as costs behaviors toward selling level changes in income
increase and decrease periods individually
CONSER Operational accrual items divided by some of assets in first period
SIZE company’s size that is obtained from market value logarithm.
LEV company’s financial leverage that is obtained by division of total debts to total
assets.
MtB companies’ market value to their book value.
SG selling growth that is obtained by division of annual difference of this and
previous year on selling of the future year
ROA return of assets which is obtained from division of divided net benefit to total
assets.

55
 Chapter Four: Results and Discussion

4: Results and Discussion:

This chapter discussed the results and discussion of variables of the study. In this chapter
descriptive statistics analysis, correlation analysis, and regression analysis of the variables are
discussed and turn the results listed in the table below and the results discussed by STATA
software help to create different test operations.

4.1 Descriptive Statistic:

Descriptive statistics count the entire population or a sample summary of the data that a given set
of data, a short description can be represented as a set of coefficients. The data set used central
tendency and variability measures or steps to the right. In this study for analyzed the data used
descriptive statistics to calculate the Maximum, Minimum, Mean and Standard Deviation of
Dependent, independent and Control variables. Maximum and Minimum values help to check the
Maximum and Minimum values in the data. Mean helps to check the average value response and
Standard Deviation helps to check the variability measurement.

Table 4.1 presents the summary of descriptive statistics analysis.

56
 Table 4.1

Descriptive Statistics

Variables Minimum Maximum Mean Standard Deviation

Dependent Variables

P -.8041 11.0796 .2846737 .811517

Independent Variables

STICKY 0 4731.368 8.678626 140.6368

CONSER -331.2413 2187.954 7.794796 93.1952

Control Variables

SIZE 3.4032 10.1381 6.420464 1.028628

LEVG 0 917.4192 4.261246 48.90895

SG -.9998 33443.02 29.13268 886.6781

MtB 0 160581.6 314.9694 6216.605

ROA -9.7263 368.7215 1.108199 15.25087

No of Observations = 1500

Key = P (Stock Price Volatility), STICKY (Cost Stickiness), SIZE (Company Size), LEVG
(Leverage), SG (Selling Growth), MtB (Market to Book Value), ROA (Return on Assets)

Explanation:

In this study used the dependent variables P (Stock Price Volatility). The descriptive analysis
table reports the minimum value of P -.8041 and maximum value 11.0796. The mean value of
this variable is .2846737 and SD is .811517.

57
In this study discussed two independent variables such as STICKY and CONSER (Cost Stickiness
and Conservatism). According to the( table 4.1) the Minimum value of STICKY is 0 and
Maximum value of STICKY is 4731.368, and respectively the Mean and SD value of STICKY is
8.678626 and 140.6368. CONSER is the second Independent Variable, the Minimum value of
CONSER -331.2413 as well as the Maximum value of the CONSER is 2187.954 and as well as
mean value of and SD of 7.794796 and 93.1952 respectively.

The descriptive analysis (table 4.1) reports the minimum and maximum values of Size (control
variable) 3.4032 and 10.1381 respectively with a mean value of 6.420464 and the SD is reported
1.028628. The second control variable Leverage shows the minimum value 0 and the maxim value
of this variable is 917.4192. the Mean and SD vale of this variable is 4.261246 and 48.90895
respectively. The 3rd control variable SG Minimum and Maximum value -.9998 and 33443.02,
respectively value of Mean and SD is 29.13268 and 886.6781. The 4th control variable is MtB,
Minimum value is 0 and Maximum value is 160581.6 as well as the Mean value of SG is 314.9694
and SD value is 6216.605. The 5th control variable is ROA; Minimum and Maximum values is
-9.7263 and 368.7215, and respectively the Mean value is 1.108199 and the SD value is 15.25087.

In the above (table 4.1) highlights that the selected companies have higher mean value of STICKY
is (8.678626) as compare to the CONSER mean value (7.794796).

4.2 Inferential Statistic:

4.2.1 Cor-relation:
Correlation shows relationship between dependent and independent variables. In table no. 02
correlation shows result of dependent variables P (Stock Price Volatility) and independent
variables STICKY and CONSER.

58
 Table 4.2

Cor-Relation

STICKY CONSER SIZE LEVG SG MtB ROA

STICKY 1.0000

CONSER 0.0090 1.0000

SIZE -0.0014 -0.0235 1.0000

LEVG -0.0044 0.0195 0.1140* 1.0000

SG -0.0009 0.0008 -0.0330 0.0001 1.0000

MtB -0.0026 -0.0042 0.0885* -0.0000 -0.0017 1.0000

ROA -0.0038 0.0636* 0.1046* 0.9203* -0.0015 0.0007 1.0000

*. Correlation is significant at the 0.1 level

** Correlation is significant at the 0.05 level
Key = STICKY (Cost Stickiness), SIZE (Company Size), LEVG (Leverage), SG (Selling Growth),
MtB (Market to Book Value), ROA (Return on Assets)

Explanation:

The above(table 4.2) revaeles the summary of cor-relation between the independent and control
variables of this research. STICKY has no any cor-relaion with CONSER (0.0090), SIZE
(-0.0014), LEVG (-0.0044), SG (-0.0009), MtB (-0.0026) and (-0.0038). CONSER has no any cor-
relation with SIZE (-0.0235), LEVG (0.0195), SG (0.0008), MtB (-0.0042) and ROA (0.0636).
SIZE has weak cor-relation with LVEG (0.1140), but no any cor-relation with SG (-0.0330) and
MtB (0.0885), repectively CONSER has weak positive cor-relation ROA (0.1046). LEVG has no
cor-relates with SG (0.0001), MtB(-0.0000), but has strong positive cor-relation with ROA
(0.9203). SG has not cor-relate with MtB (-0.0017) and ROA (-0.0015). MTB has no any cor-
relaion with ROA (0.0007).

59
Furthermore, the above table suggests that there is no moderate cor-relation or perfect correlation
among variables. The results show that the correlation values between variables are less than
0.2508 and indicate the there is problem of multicollinearity in this data (Groebner et al., 2005;
Gujarati & Porter, 2009; Garson, 2012). Therefore, this data is considered fit for further analysis.

4.2.2 Regression:

Regression is more important test which shows true result of variables which are used in study.
Regression is very operational method of statistical around by different researchers adopted for
interperate the results which are availed by using these methods.

4.2.3 Co-efficient:

Coefficient correlation is a statistical technique used to evaluate a conceivable linear suggestion

between two incessant variables. It is easy mutually to analyze and to (interpret) understand.
Though, misappropriation of association is so common among investigators that around about
statisticians have desired that the technique had not ever been developed at all. There are two types
of correlation coefficient, one is Pearson Product correlation and the second is Spearman rank
correlation. The usage of the coefficient is depending on the variables that are studied in research
(Mukaka, 2012).

4.2.4 T-Statistics:

t-statistics is used to support or reject the null hypothesis. It just like tha Z-score, to find the t-
score, z-score and compare to both. The t-statistics doesn’t really tells musch its own. T-statistics
is used with P-value to run the hypothesis. The P-value tells what the odds are that results could
have happened by chance. Greater the T-value, more evidence have that scores are significantly
different from average. Smaller T-value less edidence have that scores are not significantly
different from average (Stephanie, 2013).

60
 Table 4.3

Regression

P Coef. Std. Err. t P

STICKY -.0000107 .0001383 -0.08 0.939
CONSER .0001149 .00021 0.55 0.584
SIZE .0914922 .0194689 4.70 0.000
LEVG -.0013036 .0010211 -1.28 0.202
SG -4.27e-06 .0000221 -0.19 0.847
MtB -2.62e-06 3.14e-06 -0.84 0.404
ROA .0021946 .0032777 0.67 0.503
C -.3090528 .1267853 -2.44 0.015

F Stat ( 7,1467) = 3.49

Prob > F 0.0010
R-squared 0.0164
Adj R-squared 0.0117
Root MSE .75194
No of Observation = 1475

P (Stock Price Volatility), STICKY (Cost Stickiness), SIZE (Company Size), LEVG
(Leverage), SG (Selling Growth), MtB (Market to Book Value), ROA (Return on Assets)

Explanation:

According to statistics analysis of value of P must be equal to 0.05 or less than 0.05 for significant
relation or results. If there is P value is greater than 0.05 than there is no any significant results.

In table no. 03 dependent variable P (Stock Price Volatility) and independent variables STICKY
and CONSER showing coefficient result (-.0000107) and (.0001149) respectively. The

61
relationship of STICKY has been tested by H1 which indicates that is in-significant impact on P
having result (0.939) which is greater than (P>0.05).

H2 indicates the relationship of CONSER (0.584) is in-significant impact on the P because it does
not meet requirement of (P<0.05). These result shows total panel observation 1475 in numbers and
these variables having F-statistic (3.49), Prob > F(0.0010), R-squared (0.0164), Adj R-squared
(0.0117).

H1: There is an insignificant relationship between STICKY and P.

H2: There is an insignificant impact of CONSER on P.

Table 4.4

P Coef. Std. Err. t P

STICKY .0000499 .0001571 0.32 0.751
CONSER .000381 .0002925 1.30 0.193
SIZE .2730784 .0699808 3.90 0.000
LEVG -.0010707 .001477 -0.72 0.469
SG 2.98e-06 .0000249 0.12 0.905
MtB -9.02e-07 4.92e-06 -0.18 0.855
ROA .0000822 .0045485 0.02 0.986
C -1.481141 .4513527 -3.28 0.001

F Stat (7,1173) = 2.80

Prob > F 0.0068
R-squared 0.0164
Between 0.0457
Overall 0.0152

62
 Avg 5.0
Max 5
Number of obs = 1475

Number of groups = 295

Obs per group: min = 5

4.3 Determination of model to estimate regression model

According to the research literature and the nature of this study hypothesis, panel data used in
this research. Therefore, Chow Hausman test has been qpplied to test the hypothesis of panel
data with fixed or random effect. Fixed effect used when just analyze the impact of variables that
fluctuate over the period.

Regression Models equation:

H1 = P = β0 + β1 STICKYit + β2 CONSERit + β3 SIZEit + β4 LEVGit + β5 MtBit + β6 SGit + β7

ROAit + ɛit

After testing the regression hypothesis the results obtained from regression model as under:

Based on the table 4.4 results shows the coefficient of STICKY and CONSER is (.0000499) and
(.000381) respectively. P-value of the STICKY is (0.751) which is grater than the (P> 0.05) that
indicates the insignificant relationship or impact on P. P-value of the CONSER is (0.193) that
is greater than (P>0.05) and have insgnificant impact on the P. F-statistics value in the avove
table is (7,1173) = 2.80, Prob > F value in above table is 0.0068 wich in less than the (P>0.05)
and this probability indication the significance relation of STICKY and CONSER or impact on the
stock price volatility. No. of observations are 1475 in numbers. R- squared value in the abvoe table
is (0.0164). in this results indicates that cost stickiness have insignificant on the stock price
volatility (P). The results indicates that cost stickiness have no impact or not influence the stock
price volatility (P).

63
 Tabel 4.5

P Coef. Std. Err. t P

STICKY -.0000107 .0001383 -0.08 0.939
CONSER .0001149 .00021 0.55 0.584
SIZE .0914922 .0194689 4.70 0.000
LEVG -.0013036 .0010211 -1.28 0.202
SG -4.27e-06 .0000221 -0.19 0.847
MtB -2.62e-06 3.14e-06 -0.84 0.404
ROA .0021946 .0032777 0.67 0.503
C -.3090528 .1267853 -2.44 0.015

F Stat (294, 1173) = 0.89

Prob > F 0.8877
R-squared within 0.0130
Between 0.0511
Overall 0.0164
Avg 5.0
Max 5
Number of obs = 1475

Number of groups = 295

Obs per group: min = 5

Explanation:

Based on the table 04 results shows the coefficient of STICKY and CONSER is ( -.0000107) and
(.0001149) respectively. STICKY shows the negative creelation coefficient with the stock price
volatility (P). P-value of the STICKY is (0.939) which is grater than the (P> 0.05) that indicates

64
the insignificant relationship with P. P-value of the CONSER is (0.584) that is greater than
(P>0.05) and have insgnificant impact on the P. F-statistics value in the avove table is
(294, 1173) = 0.89, Prob > F value in above table is 0.8877 wich in greaer than the (P>0.05) and this
probability indication the insignificance relation of STICKY and CONSER or impact on the stock
price volatility. No. of observations are 1475 in numbers. R- squared value in the abvoe table is
(0.0130). in this results indicates that cost stickiness have insignificant on the stock price volatility.
The results indicates that cost stickiness have no impact or not influence the stock price volatility
(P) and also the CONSER doesn’t influences the stock price volatility (P)

65
 Chapter five: Conclusion

5.1 Conclusion:

This study examine the relationship of cost stickiness as conservatism with stock price volatility.
To measure the relationship of cost stickiness and stock price volatility data has been collected
from the non-financial companies that are listed in Pakistan Stock Exchange. In this research 1475
no. of observation has been calculated or taken to analyse the data. Secondary data has been
collected to achieve the objective of this study. In this study secondary data has been collected
from financial statements of annual reports of nonfinancial companies, Pakistan Stock Exchange
profile. The secondary data has been collected for the period 2013-2017. To analyse this study
different statistics techniques and analysis procedures are used; such as descriptive statistics
(minimum, maximum, mean and standard deviation) and infrential statistics analysis (correlation
and regression).

This research contains at numerous chapters, first, introduction which is contain on the background
of the study, study objective, problem statement and significance of the study. Second, the
overview of existing literature of cost stickiness and stock price volatility, definitions of variables,
conceptual framework and research gap identified. Third, data and methodology which contains
on model and description of variables. At fourth, interpret the analysis of variables and results of
that’s variables and relationship of among variables. At last, present the short summary of
conclusion.

5.2 Contribution of the Study:

In this study conclude that companies tha have high cost stickiness means, which increase the costs
(selling, general & Adminirtrative costs) while increase the income level or income increase
periods, but their cost does not decrease in income decrease periods, have high cost stickiness.
Since the income decrease preiods costs are relatively high, then companies face cash operational
flows and can’t flow the expected profit by shareholders and face with stock price decrease.

66
In this study conclude the contribution of this paper in three ways as follow under:

 Methodological
 Theoretical
 Practical

5.2.1 Methodological:

This study has assumed operative and exclusive methodology of study in limited framework by
the valuation of different characteristics of cost stickiness in term of accounting conservatism and
its relationship with the stock price volatility in non-financial sector Pakistan Stock Exchange.
This study has implemented opportuneness intellectual method for considerate more broadly about
the important under conversation matter of cost stickiness in establishment’s and simplifying to
accomplishment the key objects of this study.

This research collects second hand data by different sources, data 5 years from 2013 to 2014 of
non-financial companies listed in Pakistan Stock Exchange and applied various statistical analysis
like descriptive and inferential statistical techniques to examine the important aspects of costs
stickiness on the stock price volatility.

this investigation contains with different sources of secondary data collection, data techniques and
statistical analysis procedures which provides methodological contributions in the non-financial
sector by investigate some important attributes of costs stickiness on stock price volatility.

5.2.2 Theoretical:

The objective of this study is to create a new perception of cost stickiness and additional be certain
of to support or comprehend the prevailing theoretic literature on it and it impact on stock price
volatility.

Study of stock price volatility in cost stickiness in term of accounting conservatism have important
role in costs management. Provides guidelines to investors and other stakeholders protection from
loss-making projects. Stock price volatility has several different claims for trading, capitalizing
and predicting the way of the stock market. Study of the stock price volatility with cost stickiness
also accounting conservatism helps the government to make policy to control the inflation,

67
deflation, and other factors that affect the economy and to Pakistan Stock Exchange. It helps the
management of corporations to management the cost such as the selling general and administrative
and other cost of the corporation. It helps the investors to check out the volatility in the market and
how the cost stickiness increases or decreases the market share price. Through this, any corporation
or business can forecast the direction of the market, then can take the idea what the economy
expects, so volatility has claim outside the stock market. Volatility can be stated in a single stock
and its performance relative to other stocks. Some stocks are more volatile than others, some stocks
have larger or more frequent price changes than other stocks. This volatility called beta in stock,
in stock market and volatility as a measurement of risk.
A trader stocks a profit from the investor at a different time frame. When investors look long-term,
traders must get profits in short periods. This means that traders can keep a stock for a short time
as a day or a year, but for a long time. For a trader, changes in previous day prices for stocks can
indicate whether they want to buy or sell. Provides the market price and demand at the highest
level of the stock price. The cost of outstanding shares (market investment) at the time of the
company is the cost of the company. The value of shares of only two companies means
meaningless. Theoretical revenues are the same that the investors influence the value of a
company, but there are other indicators that investors use to predict stock prices. Remember, these
are the emotions, behavior and expectations of investors who eventually influence stock prices.
There are many ideas that try to explain the way to moving stock prices on the way. Unfortunately,
there is no such thing that can explain everything.

This study also concludes that impact of costs stickiness on the stock price volatility helps the
companies’ management for effective affairs, manage or control the costs such as selling, general
administrative by using the accounting conservatism (accounting principal or standard) to attract
the investors with high share prices to investment in companies.

5.2.3 Practical:

This research has not only offered methodological contributions and theoretical contributions but
also provides important practical contributions in different perspectives of business fields because
earnings is the main aspect which is focused by every business.

68
This research positioned as the full dedicated research in the local context which has purely
focused on the important research area of costa stickiness and stock price volatility in Pakistan
stock Exchange non-financial companies. Furthermore, this study is significant as the present
studies, it is not only a stage of calculation in the prevailing theoretical statistics in the ground of
non-financial sector but also a suggestion in the substantial technical as well as practical charities

to this perilous area of study.

This study also provides a guideline to management team of corporations about to control the costs
such as the selling, general and administrative for enhancing the efficiency and effectiveness of
business practices. This study provides information to the investors and other stakeholders
regarding any volatilities in the market price in the context of Pakistani companies. This study
made an operative involvement methodology by assuming a limited mixture of different data
collection techniques and the procedures of data analysis to conduct a full devoted study on some
significant features of stock price volatility and cost stickiness in non-financial companies of
Pakistani.

Furthermore, this study plays a vital important in the current studies, it is not only a stage of
accumulation in the present theoretical evidence in the field of non-financial sector but also a

suggestion in the substantial technical as well as applied to critical area of research. This study

also provides a guideline to managers and investors about the stock price volatility and the costs
like selling, general and administrative.

Furthermore, this study has a great important contribution of existing studie and provides valuable
contributions about the critical area of management in context of Pakistan.

Volatility is associated with unpredictability, uncertainty and has implications for market risk.
Generally, people tend to consider volatility as an indication of market disruption whereby
securities are not being priced fairly and the capital market is not functioning as expected. Changes
in the volatility of stock market returns can have significant negative effects on risk-averse
investors and on the economy thus many researchers have studied the movements of stock market
volatility and its effect on the economy.

69
5.3 Limitation of Study:
Every study has around about limitations relates their work. Without limitations there is no
research work is completed. In this study following limitations during implementation are as
under:

 To measure the cost stickiness different researchers, take different measures. (Asadi and
Abdoli, 2013) measure the cost stickiness by using the (Anderson model 2003), behavior
of the finished cost elements of sold products (direct material sales, assets, inventory
turnover). The “basic model” in pervious studies this model used (Anderson et al., 2003;
Subramaniam and Weidenmier, 2003; Balakrishnan et al., 2004; Anderson et al., 2005;
Hirai and Shiiba, 2006) to measure the cost stickiness. the largess change in costs only
depends on the largeness in activity volume and change in the direction of activities have
no effect on the largeness change in costs (Horn Gran et al, 2008). Calleja et al., (2006);
Norn et al, (1997) shows that growth in the costs when activity level is improved, is more
than that of reduction in the costs when activity level is reduced. This cost behaviors are
called “costs stickiness”. But in this study measure the cost stickiness by using the model
of (Anderson 2003) selling, general and administrative costs.
 Volatility in the stock market is a long discussion between the market specialists and
academicians examined and determined that; volatility caused by trade itself. It means
bigger the level of occupation capacity, bigger the price arrangements Fama (1965) &
French (1980). An irregular volatility is due to rejoinder between capacity and price. It is
also maintained that volatility is determined by trading capacity followed by advent of new
information about new glides, or any kind of secluded information that integrate into
market stock prices . In this study measure the stock price volatility change in the stock
price of this year and previous year.
 In this study data obtained from Pakistan Stock Exchange. Non-financial sectors like
cement, sugar, auto-mobiles assemblers etc. work on this study (stock price volatility with
cost stickiness) is limited.

70
  Data obtained for analysis for 5 years from 2013 to 2017.
 Sample is collected for 300 companies of non-financial sectors of Pakistan Stock Exchange
(PSX).
 Many theories used in previous studies, but no any theory used in this study regarding this
research work.
 Different theories used by different researchers, but in this study agency theory is used to
describe its agency cost recapture and achieve the incomes of an organization.

5.4 Recommendations:
Limitation of this research reports that some aspects of stock price volatility and cost stickiness
are still under the discussion and suggest that it can be fulfil and extend in future research work. It
is an opportunity for future researchers to extend this study by translating the future costs
management which can facilitate the management to control the cost and this controlling the cost
helps the investors minimum volatility in stock price.

 This research work can apply more than five years for more no of observations and
effective results.
 In limitation indicate that there is no any model used for this research work. Autoregressive
Conditional Heteroskedacity (ARCH) and Usually Used introduced by the Generalized
Autoregressive Conditional Heteroskedacity (GARCH) Engle (1982), Bollerslev (1986)
and Nelson (1991). This Model can used to measure the stock price volatility for future
research.
 Only non-financial sector used in this research or study but in developing and developed
countries financial sector can be apply on this research.
 In future this research area can cover with all non-financial companies in Pakistan and
more observation for effective findings and facilitate to investors and management.

71
5.5 Summary of study:
This study focus on to investigate the impact of cost stickiness as conservatism on the stock price
volatility in pakistan non-financila firms. In this research identified the several other factors that
affect the stock price volatility such as the selling growth, inflation, firm performance, change in
policy, political instability etc. finding of this study has motivated to decreases the cost such as
the selling, general and administrative for the benefits of investors, stackholders.

Furthermore, findings of this research might to be proving that the cost management of the firm
focus on to control the costs that is beneficial for organization as well as for investors. This study
also concludes that impact of costs stickiness on the stock price volatility helps the companies’
management for effective affairs, manage or control the costs such as selling, general
administrative by using the accounting conservatism (accounting principal or standard) to attract
the investors with high share prices to investment in companies.
Finaly, indicates the results that the cost stickiness has insignificant impact on the stock price
volatility in term of conservatism.

72
References:

Alavinasab, S. M., et al. (2017). "The Effect of Economic Growth on Cost Stickiness in Tehran
Stock Exchange." International Journal of Finance and Accounting 6(3): 87-94.

Asadi, M. and M. R. Abdoli (2015). "Study on the behavior of finished cost elements of sold
product and its effect on costs stickiness in companies listed in Tehran Stock Exchange."

Fasarany, M. G., et al. (2015). "Sticky Cost Behavior and Accounting Conservatism: Evidence
from Tehran Stock Exchange." International Journal of Accounting Research 42(1838): 1-7.

Jalilian, M. and E. V. Elyssai (2014). "Review and analyzing the factors affecting the stickiness
behavior of general administration costs and sales of listed companies in Tehran Stock Exchange."
Applied mathematics in Engineering, Management and Technology 2(4): 584-596.

Kama, I. and D. Weiss (2013). "Do earnings targets and managerial incentives affect sticky costs?"
Journal of Accounting Research 51(1): 201-224.

Maghsuodi, F. and A. Bandarian (2014). "Asymmetric Timeliness of Earnings: Cost Stickiness or

the Conservatism."

Mahdavinia, M. and M. Zolfaghari (2018). "Effect of intensity of cost stickiness on stock price
volatility as the role of accounting conservatism." Revista Publicando 4(13 (2)): 1084-1098.

73
Rezaei, J. and M. I. Barandagh (2016). "Review of Effect of Management Ability on Costs
Stickiness in Tehran Stock Exchange." International Journal of Humanities and Cultural Studies
(IJHCS) ISSN 2356-5926 1(1): 77-93.

Yasukata, K. (2011). "Are'Sticky Costs' the Result of Deliberate Decision of Managers?"

Hutton, A. P., Marcus, A. J., & Tehranian, H. (2009). Opaque financial reports, R2, and crash
risk. Journal of financial Economics, 94(1), 67-86.

Roh, T. H. (2007). Forecasting the volatility of stock price index. Expert Systems with
Applications, 33(4), 916-922.

Fasarany, M. G., Aslani, A., & Barandagh, M. I. (2015). Sticky Cost Behavior and Accounting
Conservatism: Evidence from Tehran Stock Exchange. International Journal of Accounting
Research, 42(1838), 1-7
Koo, J. H., Song, S., & Paik, T. Y. (2015). Earning management and cost stickiness. Advanced
Science and Technology Letters, 84, 40-44.
https://www.statisticshowto.datasciencecentral.com/t-statistic/
Nazir, M. S., Nawaz, M. M., Anwar, W., & Ahmed, F. (2010). Determinants of stock price
volatility in Karachi stock exchange: The mediating role of corporate dividend
policy. International Research Journal of Finance and Economics, 55 (55), 100-107.
Paik, T. Y., & Koo, J. H. (2017). Agency Problem, Cost Stickiness, and Controlling
Shareholders. International Information Institute (Tokyo). Information, 20(7B), 5117-5124.
Porporato, M., & Werbin, E. M. (2010). Active cost management in banks: evidence of sticky
costs in Argentina, Brazil and Canada.
Bessembinder, H., & Seguin, P. J. (1993). Price volatility, trading volume, and market depth:
Evidence from futures markets. Journal of financial and Quantitative Analysis, 28(1), 21-39.
Weiss, D. (2010). Cost behavior and analysts’ earnings forecasts. The Accounting Review, 85(4),
1441-1471.
Homburg, C., & Nasev, J. (2009). How timely are earnings when costs are sticky? Implications
for the link between conditional conservatism and cost stickiness. Implications for the Link
Between Conditional Conservatism and Cost Stickiness. AAA.

74
Kitching, K., Mashruwala, R., & Pevzner, M. (2016). Culture and cost stickiness: A cross-country
study. The International Journal of Accounting, 51(3), 402-417.
Ben‐Nasr, H., Boubakri, N., & COSSET, J. C. (2012). The political determinants of the cost of
equity: Evidence from newly privatized firms. Journal of Accounting Research, 50(3), 605-646.
Bils, M., & Klenow, P. J. (2004). Some evidence on the importance of sticky prices. Journal of
political economy, 112(5), 947-985.
Campbell, J. Y., & Shiller, R. J. (1988). Stock prices, earnings, and expected dividends. The
Journal of Finance, 43(3), 661-676.
Foster, F. D., & Viswanathan, S. (1993). Variations in trading volume, return volatility, and trading
costs: Evidence on recent price formation models. The Journal of Finance, 48(1), 187-211.
Gulen, H., & Mayhew, S. (2000). Stock index futures trading and volatility in international equity
markets. Journal of Futures Markets: Futures, Options, and Other Derivative Products, 20(7),
661-685.
Schwert, G. W. (1989). Why does stock market volatility change over time? The journal of
finance, 44(5), 1115-1153.
West, K. D. (1988). Bubbles, fads and stock price volatility tests: a partial evaluation. The Journal
of Finance, 43(3), 639-656.

Harris, L. (1989). S&P 500 cash stock price volatilities. The Journal
of Finance, 44(5), 1155-1175.

Chari, V. V., Kehoe, P. J., & McGrattan, E. R. (2002). Can sticky price models generate volatile
and persistent real exchange rates? The Review of Economic Studies, 69(3), 533-563.
Hall, R. E. (2005). Employment fluctuations with equilibrium wage stickiness. American
economic review, 95(1), 50-65.
Edwards, F. R. (1988). Does futures trading increase stock market volatility? Financial Analysts
Journal, 44(1), 63-69.
Edwards, F. R. (1988). Futures trading and cash market volatility: Stock index and interest rate
futures. Journal of futures markets, 8(4), 421-439.
Stein, E. M., & Stein, J. C. (1991). Stock price distributions with stochastic volatility: an analytic
approach. The review of financial studies, 4(4), 727-752.

75
Koutmos, G., & Booth, G. G. (1995). Asymmetric volatility transmission in international stock
markets. Journal of international Money and Finance, 14(6), 747-762.
Dean, W. G., Faff, R. W., & Loudon, G. F. (2010). Asymmetry in return and volatility spillover
between equity and bond markets in Australia. Pacific-Basin Finance Journal, 18(3), 272-289.
Bala, D. A., & Takimoto, T. (2017). Stock markets volatility spillovers during financial crises: A
DCC-MGARCH with skewed-t density approach. Borsa Istanbul Review, 17(1), 25-48.
Jebran, K., Chen, S., Ullah, I., & Mirza, S. S. (2017). Does volatility spillover among stock markets
varies from normal to turbulent periods? Evidence from emerging markets of Asia. The Journal of
Finance and Data Science, 3(1-4), 20-30.
Xu, J., & Sim, J. W. (2017). Are costs really sticky and biased? Evidence from manufacturing
listed companies in China. Applied Economics, 49(55), 5601-5613.
Banker, R. D., Basu, S., Byzalov, D., & Chen, J. (2015, August). The confounding effect of cost
stickiness in conservatism research. AAA.
da Silva Zonatto, V. C., Dal Magro, C. B., Sant, C. F., & Padilha, D. F. (2018). Effects of economic
growth in the behavior of sticky costs of companies belonging to BRICS countries. Contaduría y
administration, 63(4), 8.
Dierynck, B., Landsman, W. R., & Renders, A. (2012). Do managerial incentives drive cost
behavior? Evidence about the role of the zero earnings benchmark for labor cost behavior in private
Belgian firms. The Accounting Review, 87(4), 1219-1246.
Givoly, D., & Hayn, C. (2000). The Changing Time-Series Properties of Earnings. Cash Flows.
de Mattos Neto, P. S., Silva, D. A., Ferreira, T. A., & Cavalcanti, G. D. (2011). Market volatility
modeling for short time window. Physica A: Statistical Mechanics and its Applications, 390(20),
3444-3453.
Kanasro, H. A., Rohra, C. L., & Junejo, M. A. (2009). Measurement of stock market volatility
through ARCH and GARCH models: a case study of Karachi stock exchange. Australian Journal
of Basic and Applied Sciences, 3(4), 3123-3127.
Mala, R., & Reddy, M. (2007). Measuring stock market volatility in an emerging
economy. International Research Journal of Finance and Economics, 8(5), 53-71.
Peiris, T. U. I., & Peiris, T. S. G. (2011). Measuring Stock Market Volatility in an Emerging
Economy: Empirical Evidence from the Colombo Stock Exchange (CSE). In International
Research Conference.

76
Givoly, D., Hayn, C. K., & Natarajan, A. (2007). Measuring reporting conservatism. The
Accounting Review, 82(1), 65-106.
Pandey, A. (2003). Modeling and forecasting volatility in Indian capital markets.
Amsköld, D. (2011). A comparison between different volatility models.
Bromiker, R., Arad, I., Loughran, B., Netzer, D., Kaplan, M., & Medoff‐Cooper, B. (2005).
Comparison of sucking patterns at introduction of oral feeding and at term in Israeli and American
preterm infants. Acta Paediatrica, 94(2), 201-204.
Poterba, J. M. (2000). Stock market wealth and consumption. Journal of economic
perspectives, 14(2), 99-118.
Mala, R., & Reddy, M. (2007). Measuring stock market volatility in an emerging
economy. International Research Journal of Finance and Economics, 8(5), 53-71.
Arestis, P., Demetriades, P. O., & Luintel, K. B. (2001). Financial development and economic
growth: the role of stock markets. Journal of money, credit and banking, 16-41.
Kanasro, H. A., Rohra, C. L., & Junejo, M. A. (2009). Measurement of stock market volatility
through ARCH and GARCH models: a case study of Karachi stock exchange. Australian Journal
of Basic and Applied Sciences, 3(4), 3123-3127.
Gibbons, M. R., & Hess, P. (1981). Day of the week effects and asset returns. Journal of business,
579-596.
Givoly, D., & Hayn, C. (2000). The changing time-series properties of earnings, cash flows and
accruals: Has financial reporting become more conservative? Journal of accounting and
economics, 29(3), 287-320.
Sirunyan, A. M., Tumasyan, A., Adam, W., Ambrogi, F., Asilar, E., Bergauer, T., ... & Del Valle,
A. E. (2018). Evidence for the Higgs boson decay to a bottom quark–antiquark pair. Physics
Letters B, 780, 501-532.
https://www.getsmarteraboutmoney.ca/invest/investment-products/stocks/factors-that-can-affect-
stock-prices/
Hyde, T. (2016). Are the Olympics ever worth it for the host city? AM. ECON. ASS’N (Aug. 8,
2016).
Bessembinder, H., & Seguin, P. J. (1993). Price volatility, trading volume, and market depth:
Evidence from futures markets. Journal of financial and Quantitative Analysis, 28(1), 21-39.

77
Plümper, T., & Neumayer, E. (2012). Model uncertainty and robustness tests: Towards a new logic
of statistical inference. Available at SSRN 2129113.
Ishtiaq, M. (2015). Risk management in banks: determination of practices and relationship with
performance.
Saunders, M., Lewis, P., & Thornhill, A. (2012). Research methods for business students
(6.utg.). Harlow: Pearson.
French, K. R., & Roll, R. (1986). Stock return variances: The arrival of information and the
reaction of traders. Journal of financial economics, 17(1), 5-26.
Shiller, R. J. (1990). Speculative prices and popular models. Journal of Economic
perspectives, 4(2), 55-65.
Chen, C. X., Lu, H., & Sougiannis, T. (2012). The agency problem, corporate governance, and the
asymmetrical behavior of selling, general, and administrative costs. Contemporary Accounting
Research, 29(1), 252-282.
Weidenmier, M. L., & Subramaniam, C. (2003). Additional evidence on the sticky behavior of
costs.
Kotz, S., Balakrishnan, N., & Johnson, N. L. (2004). Continuous multivariate distributions,
Volume 1: Models and applications (Vol. 1). John Wiley & Sons.
Heit, J. A., Cohen, A. T., & Anderson, F. A. (2005). Estimated annual number of incident and
recurrent, non-fatal and fatal venous thromboembolism (VTE) events in the US.
Hirai, H., & Shiiba, A. (2006). Cost behavior of selling, general, and administrative costs. Journal
of Management Accounting, Japan, 14, 15-27.
Calleja, K., Steliaros, M., & Thomas, D. C. (2006). A note on cost stickiness: Some international
comparisons. Management Accounting Research, 17(2), 127-140.

Engle, R. F. (1982). Autoregressive conditional heteroscedasticity with estimates of the variance

of United Kingdom inflation. Econometrica: Journal of the Econometric Society, 987-1007.

Bollerslev, T. (1986). Generalized autoregressive conditional heteroskedasticity. Journal of

econometrics, 31(3), 307-327.

78
Nelson, D. B. (1991). Conditional heteroskedasticity in asset returns: A new
approach. Econometrica: Journal of the Econometric Society, 347-370.

Noreen, E., & Soderstrom, N. (1997). The accuracy of proportional cost models: evidence from
hospital service departments. Review of accounting Studies, 2(1), 89-114.
Penman, S. H., & Zhang, X. J. (2002). Accounting conservatism, the quality of earnings, and stock
returns. The accounting review, 77(2), 237-264.
Mukaka, M. M. (2012). A guide to appropriate use of correlation coefficient in medical
research. Malawi Medical Journal, 24(3), 69-71.
Ishtiaq, M., Latif, K., Ashraf, A., & Akram, M. A. Determinants of Risk Disclosure in Pakistan:
Evidence from Textile firms listed at Pakistan Stock Exchange.
Chapple, L., & Humphrey, J. E. (2014). Does board gender diversity have a financial impact?
Evidence using stock portfolio performance. Journal of business ethics, 122(4), 709-723.

Gu, W., Wu, Z., Bo, R., Liu, W., Zhou, G., Chen, W., & Wu, Z. (2014). Modeling, planning and
optimal energy management of combined cooling, heating and power microgrid: A
review. International Journal of Electrical Power & Energy Systems, 54, 26-37.

79
80