Cost Stickiness in Brazilian Firms

14 Pages Posted: 3 Feb 2005

Date Written: October 7, 2004


Conventional cost accounting assumes that the relation between cost and volume is symmetric for volume increases and decreases. We test an alternative model where costs increase more when activity rises than they decrease when activity falls by an equivalent amount. We find, for a sample of Brazilian firms that selling, general, and administrative costs increase 0.59% per 1% increase in sales but decrease only 0.32% per 1% decrease in sales. We test several hypotheses about the properties of sticky costs and how the stickiness of SG&A costs changes with firm circumstances and we confirm cost stickiness for Brazilian firms.

Keywords: Cost accounting, sticky costs, Brazilian firms, panel data

JEL Classification: M40, M46, M11

Suggested Citation

de Medeiros, Otavio Ribeiro and De Souza Costa, Patricia, Cost Stickiness in Brazilian Firms (October 7, 2004). Available at SSRN: or

Otavio Ribeiro De Medeiros (Contact Author)

University of Brasilia ( email )

Campus Universitario Darcy Ribeiro
Gleba A - Reitoria
Brasilia, DF 70910-900


Patricia De Souza Costa

Universidade de Brasilia ( email )

Campus Universitario Darcy Ribeiro
Gleba A - Reitoria
Brasilia, DC DF 70910-900

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