Authors: Dimitris Balios, Nikolaos Eriotis, Vassilios - Christos Naoum, Dimitrios Vasiliou

Title: The influence of earnings management‘s differences in the stickiness of selling general and administrative expenses

Abstract

This study focuses on earnings management as a significant determinant of the sticky cost phenomenon, for explaining differences in cost behavior. We combine firm-level incentives to manipulate earnings with country-level differences in earnings management practices to provide a richer understanding of the effects of these practices to cost stickiness. Using a sample of G-7 countries (France, Germany, Italy, Japan, Canada, UK and USA) we find that cost stickiness is mitigated in the pervasiveness of earnings management.