Does Peers' Financial Reporting Quality Affect Asymmetric Cost Behaviour?

ABSTRACT In this research, we examine how peers' financial reporting quality affects a focal firm's asymmetric cost behaviour. We find that the degree of cost stickiness intensifies with the enhancement of financial reporting quality among peer firms. We confirm that this main result is robust even conducting several robustness tests. Overall, our findings indicate that peers' financial reporting can be an important factor affecting cost management decisions.