ASYMMETRIC COST BEHAVIOR AND CORPORATE INVESTMENT DECISIONS: EVIDENCE FROM VIETNAM`

Abstract

This study investigates whether cost stickiness influences the investment decisions of listed companies in Vietnam from 2014 to 2023. Using a two-effect fixed-effect (2FE) model and a dynamic GMM system to address the endogenous problem, the results showed that cost rigidity had a positive and statistically significant impact on investment spending, implying that businesses that maintain higher costs when revenues decline tend to invest more aggressively. Percentile regression continues to indicate significant heterogeneity: cost stickiness has no impact at low investment levels (Q10–Q25) but becomes positive and has increasing magnitude in the middle and high percentiles (Q50–Q90). These findings suggest that cost stickiness acts as an organizational slack, supporting the expansion of investment, especially in growth-oriented businesses. The study provides empirical evidence from an emerging economy, highlighting the strategic role of cost behavior in long-term investment decisions.