Corporate Strategy and Its Impact on Asymmetric Cost Behavior and Credit Risk

Abstract

Aims: The research aims to analyze the impact of corporate strategy on asymmetric cost behavior and explore how this behavior affects the level of credit risk that companies may face. Study Design: The applied aspect of the research relied on questionnaire forms, designed to test the research hypotheses and achieve its objectives. Place and Duration of Study: This questionnaire was distributed to a random sample of Iraqi university professors, accountants, auditors, and financial managers in Iraq. Methodology: The applied aspect of the research relied on a questionnaire designed to test the research hypotheses and achieve its objectives. This questionnaire was distributed to university professors, accountants, auditors, and financial managers. The questionnaire comprised 29 questions, divided into three axes: the first axis measured the company's strategy, the second axis assessed asymmetric cost behavior, and the third axis evaluated the cost of credit. A five-point Likert scale was used to express the five-dimensional statements, with scores ranging from one point for "completely disagree" to five for "completely agree." The reliability of the scale was confirmed by measuring Cronbach's alpha coefficients, as well as by the split-half reliability method. Using SPSS. Internal consistency was also calculated for each study dimension and its component questions using the Pearson correlation coefficient. Results: The research classifies corporate strategies into two main types: cost leadership strategies and differentiation strategies, focusing on the extent to which cost behavior differs between these strategies. The relationship between behavior and credit risk is also analyzed using relevant financial and accounting indicators and statistical methods. The results indicate that corporate strategy plays a fundamental and pivotal role in shaping cost behavior, as companies with differentiation-based strategies exhibit a higher tendency toward asymmetric cost behavior, leading to unclear credit risk assessments by lenders, investors, and stakeholders. Conclusion: The analysis results revealed a partial mediating role for asymmetric cost behavior between corporate strategy and credit risk, indicating that corporate strategy affects credit risk partly through its impact on asymmetric cost behavior. This research contributes to the accounting and financial literature by linking management's cost behavior with clear and tangible economic outcomes. One of the study's most important recommendations is for companies to enhance transparency in their financial reporting by examining the direct relationship between corporate strategy, cost behavior, and credit risk, thereby reducing the levels of credit risk they face in their operations.