The influence of the trade-off between profitability and future increases in sales on cost stickiness

Josep Mª Argilés-Bosch, Josep García-Blandón, Diego Ravenda, Maika M. Valencia-Silva and Antonio D. Somoza

Estudios de Economia, 2017, vol. 44, issue 1 Year 2017, 81-104

Abstract: This study analyses cost stickiness under the dilemma between current profitability and future sales increase. When activity decreases firms are faced to keep profitability adjusting resources, while they should also consider long term consequences and keep slack resources which allow building firms capacities to adapt to external challenges and take advantage of future opportunities. We find empirical evidence that changes in current firm profitability and one year ahead sales increase significantly influence resource adjustment in periods when sales decrease. We find a significant moderating effect of changes in profitability, as well as a significant stressing effect of one year ahead sales increase, on cost stickiness.

Keywords: Cost stickiness; profitability; increases in sales; slack; resource adjustment (search for similar items in EconPapers)
JEL-codes: M10 M21 M41 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:udc:esteco:v:44:y:2017:i:1:p:81-104

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