Cost Management Research

TLDR

Traditional cost behavior models assume a simple mechanistic link between drivers and costs, but contemporary research shows that costs arise from managerial decisions influenced by constraints, incentives, and biases, opening the cost “black box” for studying decision determinants and outcomes. This paper reviews recent cost‑management research, emphasizing its implications for cost, managerial, and financial accounting and outlining future research directions. The authors conduct a comprehensive literature review of recent cost‑management studies, synthesizing findings and identifying implications for accounting and future research.

Abstract

ABSTRACT The traditional view of cost behavior assumes a simple mechanistic relation between cost drivers and costs. In contrast, contemporary cost management research recognizes that costs are caused by managers' operating decisions subject to various constraints, incentives, and psychological biases. This conceptual innovation opens up the “black box” of cost behavior and gives researchers a powerful new way to use observed cost behavior as a lens to study the determinants and the consequences of managers' operating decisions. Banker and Byzalov (2014) presented an overview of the economic theory of cost behavior and major estimation issues. The research literature on cost management has grown rapidly in the past few years and has enhanced the understanding of how managerial decisions influence observed costs. In this study, we provide a comprehensive review of recent findings and insights, with a particular emphasis on the implications of cost management for understanding issues in cost, managerial, and financial accounting, and challenges and opportunities for future research.