Asymmetric cost behavior and firm value: the role of the COVID-19 pandemic

Mohamed A. Saleh and Yasmine M. Ragab

Accounting Research Journal, 2025, vol. 38, issue 5-6, 707-725

Abstract: PurposeThis study aims to examine the effect of asymmetric cost behavior on firm value in crisis situations, with a focus on the COVID-19 pandemic.Design/methodology/approachUsing a sample from the Egyptian-listed firms between 2018 and 2021 to measure cost stickiness using industry- and firm-level measurements from Anderson et al. (2003) and Weiss (2010). The authors divided the sample into two subgroups, two years before and two years during the COVID-19 pandemic, using assorted regression models to test the research hypotheses.FindingsUsing the Egyptian context, the authors find that selling, administrative and general costs (SG&A) became stickier during the COVID-19 pandemic, hurting firm value proxied by Tobin’s Q, while cost of goods sold (COGS) showed anti-stickiness due to supply chain disruptions. The robustness test supports the main findings.Practical implicationsThis study provides valuable insights for stakeholders (e.g. managers and investors), enhancing their understanding of cost behavior. This knowledge affects the firm’s value and shareholder wealth, enabling informed decisions during periods of uncertainty.Originality/valueThis study is among the earliest empirical insights to examine the impact of the COVID-19 pandemic on the relationship between cost stickiness and firm value within the international and Egyptian contexts.

Keywords: Pandemic; Sticky cost; Cost of goods sold; Selling; General and administrative costs; Tobin’s Q (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eme:arjpps:arj-05-2025-0192

DOI: 10.1108/ARJ-05-2025-0192

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