Evaluating the Effect of Political Uncertainty on the Cost Stickiness

Document Type : Original Article


1 Islamic Azad University, Mashhad

2 Islamic Azad University, North Tehran Branch


The present study's main objective is to assess the impact of political uncertainty on cost stickiness intensity. This paper attempts to compare the cost stickiness intensity in periods with high political uncertainty with other periods. The statistical population includes listed companies on the Tehran Stock Exchange during 2009-2016 that given the use of screening methods, and after omitting the remote observations, this amount reaches 131 firms. In this paper, political uncertainty and sales changes were considered independent variables to assess their impact on asymmetrical cost behavior. In this paper, the panel data approach is used to test the research hypothesis. The data analysis results of firms using the multivariate regression at the 95% confidence level demonstrate that political uncertainty has a significant effect on cost stickiness intensity. The presidential election years of 2009 and 2013 were considered as years with high political uncertainty to achieve the objectives. The study results indicate the presence of sticky behavior of sales, general, and administrative costs in the so-called years. The asymmetry in cost behaviors is stronger during election years than in the non-election years, even after controlling other firm-level and country-level determinants.