Ownership Structure, Political Uncertainty, and Asymmetric Cost Behavior

The present research investigated the relationship between political uncertainty (presidential elections) and asymmetric cost behavior and the moderating effect of ownership type (state versus private). The sample consisted of 325 Iranian companies (1,990 observations) listed on the Tehran Stock Exchange and the Iran Over the Counter. Data were analyzed using panel data and OLS multiple regression with robust standard errors. The results showed that the asymmetric behavior of selling, general, and administrative (SG&A) costs is linear during times of political uncertainty (presidential election years), but sticky in non-election years. In other words, costs decrease less than the increase in non-election years. The results also indicated the sticky cost behavior of state-owned firms and the linear (non-sticky) cost behavior of private-owned firms in election years, with state-owned firms exhibiting greater cost stickiness in election years than in non-election years. Additional tests showed that the cost behavior of goods sold is anti-sticky in both election and non-election years, with a greater degree of anti-stickiness in election years. Moreover, in state-owned and private-owned companies, this behavior was non-sticky in both election and non-election years, and state firms exhibited greater anti-stickiness in election years compared to non-election years and private-owned firms. Finally, the behavior of operating costs in both periods was linear and was not significantly different for state-owned and private-owned firms.