The Effect of Generalized Trust on Cost Stickiness: Cross-Country Evidence

Sven Hartlieb, Thomas R. Loy and Brigitte Eierle
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Sven Hartlieb: Chair for International Accounting and Auditing, Faculty of Social Sciences, Economics, and Business Administration, University of Bamberg, Kapuzinerstraße, 16, 96047 Bamberg, Germany
Thomas R. Loy: Management Accounting and Information Systems, Faculty of Business Studies and Economics, University of Bremen, Max-von-Laue-Straße 1 28359 Bremen, Germany
Brigitte Eierle: Chair for International Accounting and Auditing, Faculty of Social Sciences, Economics, and Business Administration, University of Bamberg, Kapuzinerstraße, 16, 96047 Bamberg, Germany

The International Journal of Accounting (TIJA), 2020, vol. 55, issue 04, 1-37

Abstract: We investigate the impact of an informal social attribute on cost behavior. More specifically, we examine the effect of generalized trust (trust in others) on cost stickiness. Using a large international sample from 44 countries, we find that generalized trust significantly increases cost stickiness. Important rationales for this result are that managers in more trusting societies are more optimistic and are committed to stable, long-term employment relationships. This study makes a significant contribution in understanding cost stickiness differences across the globe. Our results further complement prior research which has found, to the contrary, that trust and cost stickiness are negatively associated at the local level. Hence, our study corroborates the importance of distinguishing between local social capital and global generalized trust concerning their effects on economic outcomes.

Keywords: Cost behavior; trust; social capital; national culture; societal attribute (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (3)

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DOI: 10.1142/S1094406020500183

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