Cost and Earning Dynamism: The Cointegration Approach

The study examine the existence of a long run equilibrium between various cost variables and earning and the existence of cost variables stability of the in the firm. Secondary data from the financial reports of Cadbury Nigeria plc covering 2001 to 2010 was adopted for the study. The Augmented Dickey Fuller (ADF) unit root technique was used for the stationary test while the Engle-Granger approach was adopted for the cointegration test. The study reveals that long run relationships exist between the variables and the long run stability relationships exist between the variables, however, at weak significant point. It was recommended that cost management and review strategies should be adopted by the firm to strengthen the position of the firm in the industries and to put the firm in long run control of it cost and performance horizon