The Asymmetrical Behavior of Cost: Evidence from Jordan

The study investigates whether different types of cost accounts are sticky or anti-sticky cost behavior using all listed Jordanian manufacturing companies during the period 2008-2012. Also, the study examines the effect of some explanatory factors on cost stickiness. These factors are asset intensity, debt intensity, free cash flow and growth. The study finds anti-sticky cost behavior for cost of goods sold, and selling expenses, while the cost behavior for SG&A and Administration costs is found to be symmetric, exhibiting neither stickiness nor anti-stickiness. The CGS model shows higher degree of stickiness for companies that have higher asset intensity, and less degree of stickiness for free cash flow. Also, less degree of stickiness is found for growth in the GDP declining period (pessimistic period) as in the case of Jordan. On the other hand, selling expenses model shows higher degree of stickiness for free cash flow and a less degree of stickiness is found for debt intensity.