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Cost Stickiness in Brazilian Firms


  • Otavio Ribeiro De Medeiros

    (Universidade de Brasilia, Brazil)

  • Patricia de Souza Costa

    (Universidade de Brasilia, Brazil)


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.

Suggested Citation

  • Otavio Ribeiro De Medeiros & Patricia de Souza Costa, 2004. "Cost Stickiness in Brazilian Firms," Finance 0412021, EconWPA.
  • Handle: RePEc:wpa:wuwpfi:0412021
    Note: Type of Document - pdf; pages: 14

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    cost accounting; sticky costs; Brazilian firms;

    JEL classification:

    • G - Financial Economics

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