A Comparative Study of the Adhesive Behavior Observed in Sales, Administrative and General Costs and the Cost of Sales Product among Firms Listed in Tehran Stock Exchange

An increase in sales will relatively induce an increase in costs, but a decrease in sales does not reduce costs; this irregular behavior in costs is called adhesiveness of costs. Therefore the main objective of this research is to comparatively analyze the adhesive behavior of sales, administrative and general costs as well as the cost of sold goods as the major costs mentioned in financial statements. According to the results acquired through the current research based on the data from 185 firms listed in Iran stock exchange in a period of 10 years since the beginning of 2003 until the end of 2012, one percent increase in sales leads to a 62% increase in sales, administrative and general costs, while one percent decrease in sales leads to a 39% decrease in sales, administrative and general costs. Besides one percent increase in sales size leads to a 71% increase in sold goods, while one percent decrease in sales leads to a 45% decrease in the cost of sold goods. In addition this study examines how the intensity of cost adhesiveness changes during different periods and among different firms. The results indicate that cost adhesiveness is less intense in the periods following a decrease in revenues. Besides costs adhesiveness is more intense in firms with a greater ratio of total assets to sales.