A Study on the Impact of the Executives’ Optimistic Expectations on Cost Stickiness in Chinese Listed companies

Recent research attributes cost stickiness to deliberate decisions made by mangers. Based on the data of Chinese Listed companies from 2007 to 2010, this paper studies the impact of the executives' optimistic expectations on cost stickiness. The empirical test shows that cost stickiness occurs if mangers are optimistic about future sales, and is accentuated with the optimistic expectation arising; but when mangers are pessimistic about future sales, cost behavior is not clear. The results show that the executives' optimistic expectations can enhance cost stickiness, which provide a new way for mangers' cost management and stakeholders' cost analysis.