Cost stickiness in Sweden

Abstract: This study investigates the cost stickiness phenomenon and how it is influenced by macroeconomic conditions and firm characteristics in Sweden. Cost stickiness refers to asymmetric cost behavior, where the cost increase that accompanies a rise in economic activities exceeds the cost decrease resulting from an equivalent fall in economic activities. Quantitative method and multiple regression analyses are applied to analyze the sample that consists of 4080 firm-year observations from 229 publicly listed companies in Nasdaq Stockholm AB from 2008 to 2019. This paper confirms the existence of the cost stickiness phenomenon in Sweden using revenue and the total selling, general, and administrative (SG&A) cost variables. Moreover, the study shows no significant impact of macroeconomic conditions on cost stickiness. Furthermore, the degree of cost stickiness increases with higher fixed asset intensity and lower employee and debt intensities.