The Effect of Cost Stickiness on Peer-Based Valuation in Tehran Stock Exchange

This study investigates the effect of cost stickiness, a form of asymmetric cost behavior, on the accuracy of peer-based valuation models. Using ۱,۳۵۶ firm-year observations from companies listed on the Tehran Stock Exchange between ۲۰۱۴ and ۲۰۲۳, we measure cost stickiness with the Weiss (۲۰۱۰) approach and evaluate valuation errors across EBIT, EBT, and net income multiples. Fixed-effects panel regressions with robust standard errors are applied to control for firm-specific heterogeneity. The results show that cost stickiness has a positive and significant impact on valuation errors in all specifications. Firms with higher sticky costs are systematically undervalued, as suppressed earnings bias multiples downward without reflecting true market value. Profitability, firm size, and sales growth reduce valuation errors, while leverage exerts weaker or negative effects. By extending prior evidence from developed markets to an inflationary emerging economy, this study identifies cost stickiness as a systematic driver of mispricing in peer-based models, with important implications for analysts, managers, and regulators.

کلیدواژه ها:

Peer ، Based Valuation Cost Stickiness Tehran Stock Exchange