The Effect of Economic Growth and Sanctions on Cost Stickiness in Listed Firms on the Tehran Stock Exchange

Document Type : Research Paper


1 Assistant Prof. in Accounting, Persian Gulf University, Bushehr, Iran

2 Assistant Prof. of Economics, Persian Gulf University, Bushehr, Iran

3 MSc. Student in Accounting, Payame Noor University, Fars, Iran


Cost stickiness affects the behavior of costs in different ways. In this paper, the effect of economic growth and economic sanctions on cost stickiness was investigated. The data from 117 companies of the Tehran Stock Exchange from 1996 to 2015 was selected. Multiple regression was used for hypothesis testing and to compare the coefficients during the minor and severe sanctions, the Petronaster test has been used. To examine the cost stickiness during these periods the 20-year period was divided into the boom and recession, and usual and severe sanctions periods.Cost stickiness was investigated in terms of public and administrative costs, cost of goods sold and operational costs. Results show that cost responds asymmetrically to identical sales. Economic boom affects positively costs stickiness in other words, cost stickiness raises during the economic boom. Recession has a negative effect on cost stickiness. In other words, there is no cost stickiness during recession. Although severe economic sanctions have a negative effect on cost Stickiness, the difference of cost stickiness during the usual and sever sanctions is significant in operational costs. Despite the negative impact of sanctions on cost stickiness, the difference of public and administrative costs and cost of goods sold are not statistically significant.


Ajili, H & Mobini Keshe, Z. (2013). Iran oil embargo (with an emphasis on Europe Union oil embargo in 2012). Political and International Research, 15(15), 99-130.(in Persian)
Allen, S. H. (2008). The domestic political costs of economic sanctions. Journal of Conflict Resolution, 52(6), 916-944.
Amadeh, H. & Alizadeh, A. & Baghalian, M. (2014). The impact of economic sanctions on the level of employment in Iran. Economic strategies, 3(11), 79-104. (in Persian)
Anderson, M.C. & Banker, R.D. & Janakiraman, S.N. (2003). Are selling, general, and administrative costs ‘sticky’? Journal of Accounting Research, 41 (1), 47-63.
Anderson, S. W., & Lanen, W. N. (2007). Understanding Cost Management: What Can We Learn from the Evidence on 'Sticky Costs'? Available at SSRN:
Bahar Moghadam, M. & Khademi, S. (2016). The Investigate of cost-stickiness on periods of economic boom and recession. Journal of Management Accounting, 9(30), 67-86. (in Persian)
Banker, R. & Chen, L. (2006). Predicting Earnings Using a Model Based on Cost Variability and Cost Stickiness. The Accounting Review, 81(2), 285-307.
Banker, R. D., Potter, G. & Schroeder, R. G. (1995). An empirical analysis of manufacturing overhead cost drivers. Journal of Accounting and Economics, 19(1), 115–137.
Banker, R.D. & Byzalov, D. & Chen, L.T. (2013). Employment protection legislation, adjustment costs and cross-country differences in cost behavior. Journal of Accounting & Economics, 55(1), 111-127.
Bolo, H., Moazez, A., Khan Hosseini, D. & Nikonesbati, M. (2012) Investigating the Relationship between Management Perspective and Cost Stickiness. Journal of Program and Budget, 17 (3), 95-79.
Calleja, K., Steliaros, M. & Thomas, D.C. (2006). A note on cost stickiness: some international comparisons. Management Accounting Research, 17(2), 127-140.
Calleja, K., Steliaros, M. & Thomas, D.C. (2006). A note on cost stickiness: Some international comparisons. Management Accounting Research, 17 (2), 127-140.
Carswell, R. (1981). Economic Sanctions and the Iran Experience. Foreign Affairs, 60(2), 247-265.
Charumbira, M. (2008). Applying the gravity model to trade flow in country under sanctions: case of zimbawe (1998- 2006). Department of Political and Administration, Redeemers University, Nigeria.
 Chen, C. X. & Lu, H. & Sougiannis, T. (2012). The Agency Problem, Corporate Governance, and the Asymmetrical Behavior of Selling, General, and Administrative Costs. Contemporary Accounting Research, 29 (1), 252–282.
Chen, C.X. & Lu, H. & Sougiannis, T. (2012). The agency problem, corporate governance, and the asymmetric behavior of selling, general, and administrative costs. Contemporary Accounting Research, 29 (1), 252-282.
Cortright, D. & Lopez, G. (Eds.) (2000). The Sanctions Decade: Assessing UN Strategies in the 1990s. Lynne Rienner, Boulder, CO.
Dierynck, B. & Landsman, W.R. & Renders, A. (2012). Do managerial incentives drive cost behavior? Evidence about the role of the zero earnings benchmark for labor cost behavior in private Belgian firms. American Accounting Association, 87(4), 1219-1246.
Doxey, M. P. (1980). Economic sanctions and international enforcement (2nd ed). New York: Oxford University Press.
Drury, A.C. (1998). Revisiting economic sanctions reconsidered. Journal of Peace Research, 35 (4), 497–509.
Garabaghian, M. (1995) Theorists of Economic Growth. Tehran, Shahid Beheshti University Press.
Garfield, R. (2002). Economic sanctions, humanitarianism and conflict after the Cold War. Social Justice, 29 (3), 94-107.
Hufbauer, G., Schott, J., Elliott, K.A. & Oegg, B. (2009). Economic Sanctions Reconsidered: History and Current Policy (3rd edition). Institute for International Economics, Washington, DC.
Ibrahim, A. E. A. (2015). Economic growth and cost stickiness: evidence from Egypt. Journal of Financial Reporting and Accounting, 13(1), 119-140.
Katzman, K. (2012). Iran sanctions. Congressional Research Service, 7-5700,, RS20871.
Kazerouni, A. & Ghorbani, A. & Saghafi Kalvanagh, R. (2015). Investigate the effectiveness of unilateral sanctions and multilateral foreign trade of non-oil products in Iran. Theories of economic use, 2(1), 83-98. (in Persian)
Kordestani, Gh.R. & Mortazavi, S.M. (2012). Investigating the Effect of Managerial Decisions on Cost Sticky. The Iranian Accounting And Auditing Review, 67, (19), 73-90. (in Persian)
 Libby, R. & Rennekamp, K. (2012). Self-serving attribution bias, overconfidence, and the issuance of management forecasts. Journal of Accounting Research, 50 (1), 197-231.
Linderman, M., Shour, R. & Chisholm, A. (2007). Trade Sanctions against Iran – an Overview. INCE & CO.
Namazi, M. & Davanipour, E. (2010). Emprical evaluation of the sticky behavior of cost in Tehran stock exchange market. The Iranian Accounting And AuditingReview, 62(17), 85-102. (in Persian)
Neuenkirch, M. & Neumeier, F. (2015). The impact of UN and US economic sanctions on GDP growth. European Journal of Political Economy, 40(1), 110–125.
Noreen, E. & Soderstrom, N. (1997). The Accuracy of Proportional Cost Models Evidence from Hospital Service Departments. Review of Accounting Studies, 2(1), 89-114.
Paternoster, R., Brame, R., Mazerolle, P. & Piquero, A. (1998). Using the correct statistical test for the equality of regression coefficients. Criminology, 36(4), 859-866.
Peksen, D. & Drury, A.C. (2010). Coercive or corrosive: the negative impact of economic sanctions on democracy. Taylor & Francis Journals, 36 (3), 240–264.
Shahrabadi, A. & Youssefi, R. (2007). Introduction to Behavioral Finance. Journal Stock Exchange, 69(1), 24-33.
Tayyebnia, A. & Ghasemi, F. (2010). Measuring Business Cycles in Iran. Economic Research Journal, 92(45), 183-206. (in Persian)
Williamson, O. & Masten S.E. (eds.) (1995). Transaction Cost Economics, Brookfield, VT, Edward Elgar.
Wood, R.M. (2008). A hand upon the throat of the nation: economic sanctions and state repression, 1976–2001. International Studies Quarterly, 52 (3), 489–513.
Yasukata, K. & Kajiwara, T. (2011). Are “Sticky Costs” the Result of Deliberate Decision of Managers? Online. Available in: 1444746.