Effect of Prior Sales Changes on Asymmetric Cost Behavior

• Main Authors: Naser Izadinia, Alireza Soultani, Mohammadreza Fakharmanesh
• Format: Article
• Language: fas
• Published: Alzahra University 2015-02-01
• Series: پژوهش‌های تجربی حسابداری
• Subjects: Asymmetric cost behavior; Cost Stickiness; informed decisions hypothesis; changes of prior periods earning
• Online Access: http://jera.alzahra.ac.ir/article_1910_b0ea4d40562b4c56b5b1d2dfbaf2381e.pdf

Recent experimental researches conducted on cost behavior have shown that costs are increased following increase in sales but they are not decreased similarly when sales is reduced. This Asymmetric Cost Behavior is called cost stickiness. One of the most important hypotheses presented about cost stickiness is managers' informed decisions hypothesis. Therefore, this study is aimed to examine the effect of prior earning changes, as factor affecting management expectations, on cost stickiness. Sample of this research is 104 firms listed in Tehran Stock Exchange during 10-year period (2003-2012). Results of research indicate that stickiness of sale, general and administrative costs is more in two prior subsequent periods that earning has been increased. While stickiness of cost of goods sold has decreased in two prior subsequent periods that earning has been increased.