The Effect of Off-balance Sheet Financing and Financial Constraints on Cost Stickiness

Document Type : Research Paper

Authors

1 Payam noor university of tehran

2 university of economic sciences

3 tarbiat midares university

Abstract

This paper seeks to empirically test the effect of off-balance sheet financing and financial constraints on cost stickiness.In addition, it deals with the effect of financial leverage, the size of the firm, earnings quality, earning ratio on the effect of off-balance sheet financing and financial constraints on cost stickiness.Cost stickiness means that the ratio of sale decrease is less than that of cost in creaseat the time of increase in sales. To perform the analysis, the data from 60 companies listed between the years 2008 to 2013 were used. To test the hypotheses, the multiple regression using the combined data is used. The experimental evidence shows the behavior of cost stickiness and the effect of financing costs and financial constraints on the strength of cost stickiness.The findings indicate a strong positive correlation between the severity of stickiness with off-balance sheet financing and financial constraints on all the companies studied, regardless of the type of industry

Keywords

References

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History

  • Receive Date: 01 March 2015
  • Revise Date: 05 October 2015
  • Accept Date: 24 January 2016

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