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Is Cost Stickiness Associated with Sustainability Factors?

Advances in Management Accounting

ISBN: 978-1-83982-913-0, eISBN: 978-1-83982-912-3

Publication date: 28 September 2020


Purpose – The purpose of this study is to investigate whether a firm’s cost structure (specifically, its cost stickiness) is associated with environmental, social, and governance (ESG) sustainability factors of performance and disclosure.

Methodology/approach – This study uses MCSI Research KLD Stats (KLD) and Bloomberg databases for the 13-year period from 2003 to 2015 in constructing ESG performance and disclosure variables, respectively. The authors adopt the general cost stickiness models from Anderson, Banker, and Janakiraman (2003) and Banker, Basu, Byzalov, and Chen (2016) to perform the analysis.

Findings – The authors find that a firm’s level of cost stickiness is positively associated with certain sticky corporate social responsibility (CSR)/ESG activities (both overall and when separately classified as strengths or concerns) but not with other nonsticky CSR activities. The authors also show that the association between cost stickiness and ESG disclosure is incrementally stronger for firms with CSR activities classified as sticky. Furthermore, the authors provide evidence that ESG disclosure is greater when both cost stickiness and the degree of sticky CSR activities increase. The authors show that when cost stickiness is high and CSR activities are sticky, management has incentives to increase CSR/ESG sustainability disclosure to decrease information asymmetry.

Originality/value – The findings present new evidence to understand how management integrates cost management strategies with various dimensions of sustainability performance decisions and show that not all ESG activities are equally effective when it comes to cost stickiness. The authors also demonstrate that increased sustainability disclosure helps reduce information asymmetry incrementally more when both costs are sticky and CSR activities are sticky.




We appreciate helpful comments from seminar participants at the Peking University in China, Polytechnic University in Hong Kong, the University of Memphis, and the 2016 American Accounting Association Annual Meeting.


Golden, J., Kohlbeck, M. and Rezaee, Z. (2020), "Is Cost Stickiness Associated with Sustainability Factors?", Burney, L.L. (Ed.) Advances in Management Accounting (Advances in Management Accounting, Vol. 32), Emerald Publishing Limited, Leeds, pp. 35-73.



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