The Effect of Corporate Sustainable Management on the Relationship between Cost Stickiness and Earnings Transparency

Hyunmin Oh and Sambock Park
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Hyunmin Oh: Department of Accounting, College of Social Sciences, Sunchon National University, 255 Jungang-ro, Suncheon 57922, Korea
Sambock Park: Department of Accounting, College of Commerce, Jeonbuk National University, 567 Baekje-daero, Deokjin-gu, Jeonju 54896, Korea

Sustainability, 2021, vol. 13, issue 23, 1-19

Abstract: This study empirically analyzes the relationship between cost stickiness and earnings transparency. Additionally, this study examines the effect of corporate sustainable management (CSM) on the relationship between cost stickiness and earnings transparency. The evaluation scores of Korea Corporate Governance Service (KCGS) are employed to measure CSM activities. The empirical results show that the relationship between cost stickiness and earnings transparency is significant in the negative direction. This means that the more sticky the costs of a firm, the lower the earnings transparency of the firm. In addition, the relationship between the interaction variables of CSM and cost stickiness and earnings transparency is significant in the positive direction. This indicates that CSM activities act as a mechanism to mitigate the negative relationship between cost stickiness and earnings transparency. The findings of this study, which presented the effects of cost stickiness on earnings transparency and the fact that CSM activities act as a device to suppress the opportunistic cost behavior of managers, are expected to provide important implications to investors, external auditors, and supervisors.

Keywords: corporate sustainable management (CSM); asymmetric cost behavior; cost stickiness; earnings transparency (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
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