The Effect of Generalized Trust on Cost Stickiness: Cross-Country Evidence

The International Journal of Accounting (TIJA), Forthcoming

48 Pages Posted: 17 May 2019

See all articles by Sven Hartlieb

Sven Hartlieb

University of Innsbruck

Thomas R. Loy

University of Bremen

Brigitte Eierle

University of Bamberg

Date Written: April 2, 2019

Abstract

We investigate the impact of an informal social attribute on cost behavior. More specifically, we examine the effect of generalized trust (trust in others) on cost stickiness. Using a large international sample from 44 countries, we find that generalized trust significantly increases cost stickiness. Important rationales for this result are that managers in more trusting societies are more optimistic as well as committed to stable, long-term employment relationships. This study makes a significant contribution in understanding cost stickiness differences across the globe. Our results further complement prior research which has found, to the contrary, that trust and cost stickiness are negatively associated at the local level. Hence, our study corroborates the importance of distinguishing between local social capital and global generalized trust concerning their effect on economic outcomes.

Keywords: Cost Behavior, Trust, Social Capital, National Culture, Societal Attribute

JEL Classification: A13, M40, M41

Suggested Citation

Hartlieb, Sven and Loy, Thomas R. and Eierle, Brigitte, The Effect of Generalized Trust on Cost Stickiness: Cross-Country Evidence (April 2, 2019). The International Journal of Accounting (TIJA), Forthcoming , Available at SSRN: https://ssrn.com/abstract=3373819

Sven Hartlieb (Contact Author)

University of Innsbruck ( email )

Universitätsstraße 15
Innsbruck, 6020
Austria

Thomas R. Loy

University of Bremen ( email )

Universitaetsallee GW I
Bremen, D-28334
Germany

Brigitte Eierle

University of Bamberg ( email )

Feldkirchenstraße 21
Bamberg, 96052
Germany
00499518632545 (Phone)

HOME PAGE: http://www.uni-bamberg.de/bwl-irwp/home/

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