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

  • Josep Maria Argilés-Bosch Universitat de Barcelona (Departament d’Empresa)
  • Josep García-Blandón
  • Diego Ravenda Toulouse Business School (Department of Management Control, Accounting and Auditing).
  • Maika M. Valencia-Silva Toulouse Business School (Department of Management Control, Accounting and Auditing).
  • Antonio D. Somoza Universitat de Barcelona (Departament d’Empresa)

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.

Author Biography

Josep García-Blandón
IQS, (Faculty of Economics).
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How to Cite
Argilés-Bosch, J., García-Blandón, J., Ravenda, D., Valencia-Silva, M., & Somoza, A. (2017). The influence of the trade-off between profitability and future increases in sales on cost stickiness. Estudios de Economía, 44(1), 81-104. Retrieved from http://www.estudiosdeeconomia.uchile.cl/index.php/EDE/article/view/45215/47924
Section
Articles
Published
2017-04-09