Researcher ORCID Identifier


Graduation Year


Date of Submission


Document Type

Campus Only Senior Thesis

Degree Name

Bachelor of Arts



Reader 1

Professor Eric Hughson

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After multiple decades of innovation, software firms now represent a significant share of the public equities market. Despite their prevalence and unique business models, little industry-focused research analyzes their cost structures. Software firms allocate budgeting across several major categories, including sales & marketing, research & development, and general & administrative costs. This paper explores the relative stickiness of these spending categories in response to external factors. I examine the effect of asymmetric positive and negative movements in stock price, interest rates, and economic confidence on budget changes for a sample of US software companies over more than 15 years. I find that negative movements in short-term stock price performance are associated with decreases in research & development and sales & marketing spending. Additionally, I find evidence that upward movements in real interest rates are associated with decreases in sales & marketing and general & administrative spending. Across these results, I find that each budget category shows signs of cost flexibility in response to differing explanatory variables.

This thesis is restricted to the Claremont Colleges current faculty, students, and staff.