Monitoring and understanding how costs “behave” in the public sector could help towards making it more effective through the better allocation and management of expenditures. Moreover, rational management of expenditures could ideally lead to the provision of better services, and eventually to more satisfied constituents. In this realm, the “sticky cost” phenomenon that has recently received much attention in the private sector accounting literature could provide useful insights. This new theory was introduced by Anderson, Banker and Janakiraman in their seminal paper in 2003 and characterizes costs as sticky if they decrease less when activity levels decline than in comparison to how much they rise when activity levels increase. Sticky cost phenomenon has been studied in several research works following the seminal work of Anderson et al. (2003). These studies have enriched the fundamental findings by providing evidence of asymmetric cost behaviour across different cost categories, firms and industries of the private sector (Subramaniam and Weidenmier, 2003; Chen et al., 2012; Dierynck et al., 2012; Kama and Weiss, 2013; Banker et al., 2013, Banker and Byzalov, 2014). The starting point in the sticky cost framework is that many, but not all, costs arise as a result of deliberate resource commitment decisions made by managers. According to Anderson et al. (2003), sticky cost behaviour may be created because managers do not deliberately reduce resources that are not necessary to support the reduced activity level. However, cost stickiness may not only occur thanks to behavioural reasons but thanks to economic reasons as well. While management action and its effect on cost behaviour have been studied in the private sector, the public sector has been understudied even though the public sector decision-making could influence cost behaviour as well. The interrelation of politicians with managers creates an interesting setting for decision-making in the public sector, with the existence of strong political influence affecting sound economic rationality (Robinson and Brumby, 2005). At the same time, politicians’ self-interest for getting re-elected and bureaucrats’ career concerns drive both groups to invest in short-termism (Garrí, ۲۰۱۰).