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Information Sciences Letters

Information Sciences Letters

Abstract

The study aims to investigate the asymmetric cost behavior in non-financial MENA companies and the influence of earnings management on cost stickiness. Also, the study investigates if cost stickiness is influenced by industry, economic transitions, and the companies’ characteristics. Using a sample of non-financial listed companies in ten MENA countries during 2010-2019, the results reveal sticky costs behavior and detect significant cost stickiness in the non-earnings sub-sample compared with the earnings management sub-sample, which points to that management choose to decrease expenses under the pressure of achieving earning target. The findings support prior related literature about the effect of GDP, asset intensity, debt intensity, and free cash flow on sticky cost behavior, but no evidence supports the effect of industry and successive decrease factors on cost behavior.

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