Recent research on cost behavior has revealed that costs do not change proportionately with changes in sales, showing that costs increase in response to increases in sales, but do not decline proportionately with reductions in sales. This asymmetric cost behavior is termed as “sticky costs.”...

Virtually all firms listed on Japanese stock exchanges report point forecasts of sales and earnings in their annual press releases. The availability of management forecasts in Japan provides a unique research opportunity to investigate managers' prediction of cost behavior of their company....