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

Author

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  • Sven Hartlieb

    (Chair for International Accounting and Auditing, Faculty of Social Sciences, Economics, and Business Administration, University of Bamberg, Kapuzinerstraße, 16, 96047 Bamberg, Germany)

  • Thomas R. Loy

    (Management Accounting and Information Systems, Faculty of Business Studies and Economics, University of Bremen, Max-von-Laue-Straße 1 28359 Bremen, Germany)

  • Brigitte Eierle

    (Chair for International Accounting and Auditing, Faculty of Social Sciences, Economics, and Business Administration, University of Bamberg, Kapuzinerstraße, 16, 96047 Bamberg, Germany)

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 and are 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 effects on economic outcomes.

Suggested Citation

  • Sven Hartlieb & Thomas R. Loy & Brigitte Eierle, 2020. "The Effect of Generalized Trust on Cost Stickiness: Cross-Country Evidence," The International Journal of Accounting (TIJA), World Scientific Publishing Co. Pte. Ltd., vol. 55(04), pages 1-37, December.
    • Handle: RePEc:wsi:tijaxx:v:55:y:2020:i:04:n:s1094406020500183
    DOI: 10.1142/S1094406020500183
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    Citations

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    Cited by:

    1. Charl de Villiers & Matteo La Torre & Vida Botes, 2022. "Accounting and social capital: A review and reflections on future research opportunities," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 62(4), pages 4485-4521, December.
    2. Ibrahim, Awad Elsayed Awad & Ali, Hesham & Aboelkheir, Heba, 2022. "Cost stickiness: A systematic literature review of 27 years of research and a future research agenda," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 46(C).
    3. Naoum, Vasilios-Christos & Ntounis, Dimitrios & Papanastasopoulos, Georgios & Vlismas, Orestes, 2023. "Asymmetric cost behavior: Theory, meta-analysis, and implications," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 53(C).

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