The Effect of Economic Growth on Cost Stickiness in Tehran Stock Exchange

This study attempts to investigate the effect of economic growth on cost stickiness of companies in Tehran Stock Exchange during 2008-2013. In this context, the study examines whether costs behave asymmetrically to demand change and investigates the impact of economic prosperity as well as economic recession on cost stickiness. Statistical population includes all companies listed in Tehran Stock Exchange market for the study period and 100 firms have been selected as the sample group. In order to examine the hypothesis, regression analysis of the panel data has been carried out. The results show that all costs studied, namely selling, general and administrative cost (SG&A), cost of goods sold (COG) and operating costs (OC) behave asymmetrically to demand change where all three costs were sticky during 2008-2013. Also, results reveal that the behavior of all three costs were sticky during the prosperity period (2008-2010). In addition, results indicate that all three costs behave anti-sticky during the recession period (2010-2013). Thus, the regression analysis results confirm the three study hypothesis. Further, the results indicate that costs are more stickness in prosperity period as compared to recession period.