Cost Stickiness and Cost Inertia: Two Cost Driver Model of Cost Asymmetric Behavior

with respect to asymmetric cost behavior, managers have an active role in determining the cost behavior with decisions they make about increasing or decreasing the resources in alignment with the activity level. This research with introducing and applying the cost inertia concept in explaining the asymmetric cost behavior tries to expand the theoretical background and previous researches in this subject. this has done with adding the change in property, plant and equipment driver to the Anderson et al.'s (2003) model. The research sample includes 130 companies for the period from 2003 to 2016 which are listed on the Tehran Stock Exchange. The results of the testing the hypotheses posit that the extended model has more explanatory power than the previous model in cost stickness. Moreover, the research results show that sale trends in past years shape the expectations of managers. This causes managers be optimist or pessimist with regard to increase or decrease in sale respectively. In turn, they expect this trend continues in forward year. In optimistic (pessimistic) situation, managers tend more (less) to maintain surplus resources even in the condition of decrease (increase) in current year performance. This leads to the cost stickness (anti stickness).