Examining managerial overconfidence behavioral explanation effect on cost stickiness: Comparison with economic and agency theory based factors

Abstract

Managerial overconfidence behavioral factor causes cost asymmetric. Prior literature focuses on economic and agency explanations about cross sectional variation in the degree of cost stickiness. In this research, it has been explained managerial overconfidence as a behavioral explanation for cost stickiness in listed companies in Tehran stock exchange over the period of 2002 to 2012, as statistical population. For testing the hypothesis, Anderson basic model in five situations has been used. Anderson basic model used without considering economic and agency factors and year and industry fixed effects. Research results shown managerial overconfidence factor effect on cost stickiness from first model to fifth model decreased from 76 to 62.7 percentages. Thus, managerial overconfidence as a behavioral explanation for SG&A cost stickiness is relevant.

Keywords

• agency theory explanations
• cost management
• Cost stickiness
• economic explanations
• managerial overconfidence