External Environment,Multiple Large Shareholders And Cost Stickiness

More than 40 years have passed since the Reform and Opening-up,and the economic development of China has now encountered a slowdown in economic growth,starting from a highspeed growth model to a medium-high-speed growth model,shifting gear from the previous high speed to a medium-to-high speed and laying the developmental focus much more on quality rather than quantity.In order to further optimize the supply structure,realize the improvement of supply efficiency and quality,and tap the potential demand to the maximum,General Secretary Xi Jinping has initially and innovatively proposed the "supply-side structural reform" policy which aims at promoting the integration of resource elements.By optimizing the allocation of social resources and elements,the quality of national economic development,the vitality of enterprise and the corporate competitiveness will be accordingly improved and enhanced.At the same time,the risks for a corporate are very likely to be avoided."Cost reduction" is among the five specific tasks required by "supply-side structural reform" policy.At the central economic work conference at the end of 2018,it was made clear that the focus of supply-side structural reform would then switch to cost reduction.At the micro level,"cost reduction" can be favorable for enterprises to further expand their reproduction in the future,and generate much more potential space for their development.Therefore,what cost and expense management measures should be taken to reduce costs and increase efficiency has become an urgent problem for enterprises to approach and resolve immediately at present.The first prerequisite for realizing effective cost management is distinguishing the costs according to their respective behavior.On the grounds of the traditional cost behavior theory,no matter what management decision is made by an enterprise manager,the other costs except fixed costs will change in proportion to the mechanical nature of the business volume.As a result,the enterprise manager will not pay too much attention to cost control.However,as costs are generated during the operation of the enterprise and are hence closely linked with resource allocation,which plays a decisive role in making cost management relatively vulnerable to the influence of managers’decision-making and judgement.Along with the progressive and in-depth research conducted in recent years,scholars such as Anderson used the financial data of listed companies in the United States found for the first time that the selling and general administrative costs do not have a linear relationship with changes in business volume,and then later pioneeringly named this phenomenon as "Cost stickiness".Afterwards,Chinese scholars Sun Zheng and Liu Hao presented that cost stickiness also widely exists in Chinese listed companies after having analyzed the sales and management expenses of listed companies of China.So to speak,cost stickiness opened the "black box" of enterprise cost management,and then attracted high attention from the academia.And research on this phenomenon is also gradually becoming intensive.Ownership structure is the logical starting point of corporate governance.And a reasonable ownership structure is conducive to improving the efficiency of corporate governance,prompting managers to improve the effectiveness of decision-making,formulate feasible investment plans for various resources,and optimize the allocation of resources as well as to enhance the use of enterprise assets and contrive a more effective cost management policy.nevertheless,the existent research on how the ownership structure affects cost stickiness is still insufficient.Moreover,most of the current literature has ignored the possible complex relationships between major shareholders.With all these taken into consideration,this paper attempts to analyze the effect of Multiple Large Shareholders’ ownership structure on cost stickiness,and on this basis,study the interaction mechanism between them.Apart from that,the existence and development of enterprises need to be restricted within the external environment,and hence the research on corporate governance activities cannot be separated from the external environment in which they are located.Therefore,this paper will conduct a scenario analysis of the relationship between Multiple Large Shareholders and cost stickiness by selecting economic policy uncertainty,region the degree of marketization and the intensity of industry competition from three dimensions ranging from policy,region and industry.Through theoretical analysis,research hypothesis and empirical test,the main research conclusions of this paper are as follows:(1)This paper found that there is a significant negative correlation between Multiple Large Shareholders and cost stickiness,and this conclusion is still valid after a series of robustness tests and consideration of endogenous problems,indicating that Multiple Large Shareholders can play an active role in governance and reducing cost stickiness.(2)By studying the influence mechanism of Multiple Large Shareholders on the cost stickiness,the following are revealed.Firstly,Multiple Large Shareholders can improve the quality of internal control significantly,and internal control plays a partially intermediary role between Multiple Large Shareholders and cost stickiness.Secondly,Multiple Large Shareholders evidently can enhance the performance sensitivity of executive compensation,and executive compensation performance sensitivity plays a partially intermediary role between Multiple Large Shareholders and cost stickiness.Lastly,Multiple Large Shareholders can manifestly improve the quality of accounting information,and the quality of accounting information plays a partially intermediary role in the process of restraining the stickiness of corporate expenses by Multiple Large Shareholders.(3)The scenario analysis revealed as below.Firstly,the inhibition effect of Multiple Large Shareholders on the cost stickiness is more significant when economic policy uncertainty is relatively high,which suggests that economic policy uncertainty can highlight the role of Multiple Large Shareholders in the aggravation of cost adjustment and agency issues.Secondly,when the degree of external marketization is relatively low,the inhibition effect of Multiple Large Shareholders on cost stickiness is more significant,unveiling that Multiple Large Shareholders can effectively compensate for the defects of external market environment.Finally,the inhibiting effect of Multiple Large Shareholders on the cost stickiness is mainly reflected in the lesscompetitive industries.There are specific action situations for the impact of Multiple Large Shareholders on cost stickiness.The theoretical significance of this paper mainly lies in the following points.Firstly,it enriches the research on factors influencing cost stickiness.On the basis of the merger of actors,this paper has studied the relationship between the ownership structure of Multiple Large Shareholders and the cost stickiness,and revealed the influence of this potential complex relationship on cost stickiness;Secondly,it enriches the research on economic consequences of a number of major shareholders.With the focus laid upon the "black box" of enterprise cost management,this paper enriches the economic consequences of Multiple Large Shareholders from the perspective of expense stickiness,aiming to provide new empirical evidence for the governance role of Multiple Large Shareholders in the Chinese context.;Thirdly,this paper explores the influence mechanism of Multiple Large Shareholders on cost stickiness,and reviews the action path of Multiple Large Shareholders on cost stickiness.Finally,it has been investigated that whether there is a situational dependency on external environmental when it comes to the relationship between Multiple Large Shareholders and cost stickiness.It provides a theoretical basis and microscopic evidence for enterprises to correctly and comprehensively understand and grasp the external environment and reduce the cost stickiness with the help of the governance function of Multiple Large Shareholders under different external environment.The conclusions of this paper can be a helpful reference for the concerned departments of the government to improve the capital market system,enhance policy coherence,transparency and comparability as well as for enterprises to optimize the ownership structure and boost cost management efficiency.