Download citation file: We investigate the relationship between cost stickiness and management earnings forecasts
Prior research suggests that earnings are more volatile for sticky cost firms resulting in greater earnings forecast errors
Managers might refrain from issuing earnings forecasts for sticky cost firms because greater forecast errors might damage managers' credibility and adversely affect their job security
We find that cost stickiness is positively associated with management earnings forecast issuance, suggesting that the benefits outweigh the costs
We find a positive association between cost stickiness and management earnings forecast errors, suggesting that managers do not fully incorporate the negative implications of cost stickiness into their forecasts
We find that analysts' forecast errors for sticky cost firms are greater than managers'