دانشگاه اصفهان نشریه پژوهش های حسابداری مالی 2322-3405 16 4 2025 02 19 The Effect of Cost Stickiness on Peer-Based Valuation in Tehran Stock Exchange The Effect of Cost Stickiness on Peer-Based Valuation in Tehran Stock Exchange 41 54 29923 10.22108/far.2025.145243.2129 FA Mohammad Rasool Rahnavard b Associate Professor, Department of Accounting, Faculty of Management, University of Tehran, Tehran, Iran. Ali Ebrahimi Kordlar Ph.D. Student, Department of Accounting, Faculty of Administrative Sciences and Economics, University of Isfahan, Isfahan, Iran. Journal Article 2025 05 12 This study investigates the effect of cost stickiness, a form of asymmetric cost behavior, on the accuracy of peer-based valuation models. Using 1,356 firm-year observations from companies listed on the Tehran Stock Exchange between 2014 and 2023, we measure cost stickiness with the Weiss (2010) 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. This study investigates the effect of cost stickiness, a form of asymmetric cost behavior, on the accuracy of peer-based valuation models. Using 1,356 firm-year observations from companies listed on the Tehran Stock Exchange between 2014 and 2023, we measure cost stickiness with the Weiss (2010) 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. https://far.ui.ac.ir/article_29923_a532634e59d39166b533a0ccd2c2ff0a.pdf