Investigating the contribution of corporate sustainability management in the association between cost stickiness and earnings management in Egyptian manufacturing firms

Dr Marwa Rabe Mohamed El Kamash ()
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Dr Marwa Rabe Mohamed El Kamash: October University of Modern Sciences and Arts

Future Business Journal, 2025, vol. 11, issue 1, 1-13

Abstract: Abstract The main aim of this study is to empirically investigate the mediating contribution of corporate sustainability management on the association between cost stickiness and earnings management. In this research, a sample of 41 Egyptian firms listed on the Egyptian Stock Exchange was used for eight years, from 2015 to 2023. OLS regression was used to test the four empirical models. Cost stickiness is measured using the Homburg and Nasev (2008) model. Selling, general, and administrative expenses are used as a proxy for cost stickiness. Dechow et al. (1995) model is used to measure earnings management, and the S&P Global ESG Score is used to assess a company's sustainability performance, determined by combining its environmental, social, and governance dimension scores. The findings show that cost stickiness and earnings management are positively correlated. Furthermore, corporate sustainability management negatively impacts cost stickiness. Additionally, corporate sustainability management has a positive effect on earnings management. Finally, the findings indicate that corporate sustainability management mediates the relationship between cost stickiness and earnings management and conclude that it reduces the positive impact of cost stickiness on earnings management. Practical implications Egyptian regulatory agencies may impose limits on a company's ability to borrow a certain amount relative to its assets to mitigate economic marginalization (EM), given that high levels of financial leverage may increase the risk of EM. Social implications Increasing the accuracy of the financial accounts of publicly traded Egyptian firms and outlawing earnings management practices. Originality as far as the researcher is aware, the studies address a scarce relationship, specifically in Egyptian manufacturing companies. Paper type Research paper

Keywords: Cost stickiness; Earnings management; Corporate sustainability management; Egyptian companies (search for similar items in EconPapers)
JEL-codes: M40 Q51 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1186/s43093-025-00644-1

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