Have Estimates of Cost Stickiness Changed Across Listing Cohorts?

Abstract

While the discussion of changes in financial accounting properties over time is already well-established, there is a lack of evidence whether changing firm compositions in empirical samples might bias cost stickiness research. We document that with each additional listing cohort, the U.S. public firm universe becomes more knowledge-intensive and, at the same time, more cost sticky. Higher reliance on temporary labor by newer listing cohorts partly mitigates this development. Our results recommend the use of listing cohort-fixed effects in future cross-sectional cost stickiness research.

Keywords: Asymmetric Cost Behavior; Listing Cohorts; Adjustment Costs

JEL Classification: D22, M41