Accounting seminar: A behavioural perspective of the association between cost stickiness and innovation

Presenter: Walaa Ghazy, Auckland University of Technology

In this seminar Walaa Ghazy focuses on his study which investigates the association between cost stickiness and innovation based on the behavioural theory of the firm, arguing that cost stickiness reflects the managerial decision to redirect slack resources acquired when activity level declines to support innovation activities. At the same time, the non-recognition of these resources in the financial statements motivates managers to avoid cutting costs following a decline in sales, which increases cost stickiness. The results based on a sample of 29,371 firm-quarter observations for 3,870 US public firms provide evidence of bidirectional positive causality between cost stickiness and R&D intensity. However, the results indicate that cost stickiness level does not have any significant impact on R&D productivity.

Register by email.