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229761

Sticky Cost Drivers: An Analytical Study of Cost Stickiness’ Causes

Article

Last updated: 22 Jan 2023

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Abstract

The current study provides an analytical study of the causes of sticky cost behavior from the perspective of both the deliberate decision theory and the cost adjustment delay theory. In the traditional model of cost behavior, the relationship between cost and activity volume is independent of managers' decisions, but the ABJ model presented by Anderson, Banker and Janakiraman (2003) demonstrated the role of managerial decisions in cost behavior. This means that cost stickiness is not an inevitable phenomenon but rather a result of managers' decisions whether intentional, unintended or inappropriate. Moreover, company policies, ownership structure, and social legislation may affect the cost stickiness. Using the desk research method, the author relied on previous literature to determine and categorize the cost stickiness' drivers. According to the theory of deliberate decision, the author distinction between the potential drivers of cost stickiness resulting from managers' decisions, and the drivers related to the firm. In addition, the cost may become sticky due to the inability of cost to keep pace with declining sales. According to cost adjustment delay theory, managers keep the unused resources until it is assured of a continued decline in demand or based on their expectations for a future sale, but in the long run, prices, wages, and expectations are fully adapted to the state of the markets and economy, reducing cost stickiness. This study has implications for researchers by enhancing their understanding of the sticky cost drivers.

DOI

10.21608/cfdj.2022.229761

Keywords

Cost Stickiness, Sticky cost, Intentional decision, Cost Behavior, Deliberate decision theory, Cost adjustment delay theory

Authors

First Name

Sameh

Last Name

Abdelsalam Mustafa

MiddleName

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Affiliation

قسم المحاسبة، کلية التجارة، جامعة أسيوط، أسيوط

Email

sameh.abdelmohaimen@commerce.aun.edu.eg

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Volume

3

Article Issue

2

Related Issue

32919

Issue Date

2022-07-01

Receive Date

2022-04-08

Publish Date

2022-07-01

Page Start

291

Page End

326

Print ISSN

2682-3403

Online ISSN

2682-4531

Link

https://cfdj.journals.ekb.eg/article_229761.html

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https://cfdj.journals.ekb.eg/service?article_code=229761

Order

10

Type

المقالة الأصلية

Type Code

1,242

Publication Type

Journal

Publication Title

المجلة العلمية للدراسات والبحوث المالية والتجارية

Publication Link

https://cfdj.journals.ekb.eg/

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Article

Created At

22 Jan 2023