Culture and Cost Stickiness: A Cross-Country Study

Posted: 16 Jan 2014 Last revised: 11 Apr 2017

See all articles by Karen A. Kitching

Karen A. Kitching

George Mason University

Raj Mashruwala

University of Calgary

Mikhail Pevzner

University of Baltimore - Merrick School of Business

Date Written: September 9, 2016

Abstract

In this study, we examine the effect of national culture on managerial decision-making through the lens of cost stickiness. Recent studies document that managerial discretion in adjusting resources leads to costs that are “sticky” in that costs respond less to decreases in activity than to increases in activity. We analyze how different dimensions of societal culture explain cross-country variation in cost stickiness. Using a sample of firms from 39 countries, we find that cost stickiness is less pronounced in countries with higher uncertainty avoidance, masculinity, and long-term orientation. Our findings support the proposition that culture affects resource management decisions made by managers and, in doing so, our study makes a significant contribution in understanding differences in sticky cost behavior observed across countries.

Keywords: culture, cost behavior, cost stickiness

JEL Classification: M40, M41

Suggested Citation

Kitching, Karen A. and Mashruwala, Raj and Pevzner, Mikhail, Culture and Cost Stickiness: A Cross-Country Study (September 9, 2016). International Journal of Accounting, 51(3), 402-417. Available at SSRN: https://ssrn.com/abstract=2379776 or http://dx.doi.org/10.2139/ssrn.2379776

Karen A. Kitching

George Mason University ( email )

Fairfax, VA
United States
703-993-9038 (Phone)
703-993-1809 (Fax)

HOME PAGE: http://business.gmu.edu/facultyandresearch/faculty/profile/47/41/

Raj Mashruwala (Contact Author)

University of Calgary ( email )

2500 University Drive NW
Calgary, Alberta T2N 1N4
Canada
403-220-4332 (Phone)

Mikhail Pevzner

University of Baltimore - Merrick School of Business ( email )

1420 N. Charles St.
Baltimore, MD 21201-5779
United States

Register to save articles to
your library

Register

Paper statistics

Abstract Views
1,312
PlumX Metrics