ABSTRACT
This paper investigates the relationship between corporate strategy and cost stickiness under different managerial expectation. Using the data from China listed companies from 2002 to 2015, we find that: first, different competitive strategies will exhibit different cost behavior. The cost stickiness of differentiation strategy is higher than those choosing low-cost strategy. Second, different management expectation will affect cost stickiness. Optimistic expectations can increase cost stickiness while pessimistic expectations will reduce cost stickiness. Third, management expectation can adjust the relationship between corporate strategy and cost stickiness. If management expectations tend to be optimistic, the cost stickiness is higher with differentiation strategy than those with low-cost strategy. If management expectations tend to be pessimistic, then cost stickiness is higher with low-cost strategy than those with differentiation strategy. Our study has implications for companies on cost management.
