Research On Cost Stickiness Of China's Private Listed Companies

Private listed companies of China are developping prosperously in recent years, and injecting fresh power to national economic development. As they play an important role in the field of our economy, it is necessary to make recommendations to enhance their cost management, and it is beneficial to help them to grow chronically, sustainably, and efficiently. So our nation can boost for the strength of our private listed companies in the future.In this paper, the data of the manufacturing industry will be taken as a sample of private listed companies on the empirical research of cost stickiness. Cost stickiness is that, the relative magnitude of an increase in costs for an increase in business volume is greater than the relative magnitude of a decrease in costs for a decrease in business volume. In other words, there is an asymmetry phenomenon in costs change when the business volume varies the same rangeability in opposite directions. This is against the traditional cost model which assumes costs increase or decrease equally with the volume of business increased or decreased. This sticky cost phenomenon can find an explanation from the Contract Theory and Inertia Theory of enterprises.There are two innovations in this paper. First, explaining sticky cost with Contract Theory and Inertial Theory; Second, analyzing factors to sticky cost systematically. Contract Theory includes Agency Theory, Transaction Cost Theory and Incomplete Contract Theory these three aspects, and Inertial theory put forward a new view to explain cost stickiness. They succeed and develop the traditional perspectives "contract view", "efficiency view" and "opportunism view", and also are the basis for this research hypothesis. Cost stickiness is influenced by many factors, and in different enterprises, the degree of factors'influence is radically different. The analysis of relationship between the sticky cost and factors can help enterprises to improve their level of cost control, and to increase their economic efficiency. This paper will take a perspective from external and internal these two separate parts to discuss the factors, in order to reflect the cost stickiness-related sides comprehensively. This paper mainly studies the relationship between national macro-economic environment, qualities of manager, capital structure, assets structure, ownership structure and sticky cost of private listed companies respectively. Through empirical research design and regression analysis, we get conclusions like that:(1)There is cost stickiness in private listed companies. (2) Macro-economic environment has some influence in the sticky cost of private listed companies. (3)The more the magnitude of changes in business volume is, the larger the sticky cost is; the less the magnitude of changes in business volume is, the smaller the sticky cost is; they have a positive correlation, which shows that cost management results are not satisfactory. (4) The sticky cost presents larger and larger when the year interval N increases (N= 1,2,3), and decreases till N=4, which shows that the cost management is lack of efficiency. (5) The cost stickiness is greater when the Debt-Asset Ratio is correspondingly bigger and smaller, while is smallest when DAR is moderate. (6) the greater the Liquid Assets-to-Assets Ratio of enterprises is, the larger the sticky cost is, they have a positive correlation. (7) The cost stickiness is greater when the concentration Ratio is correspondingly bigger and smaller, while smallest when moderate. These results support us to bring forwar recommendations to enhance the level of cost management in private listed companies.Although the cost stickiness can not be eliminated completely, we can optimize the external environment and strengthen the internal management of the private listed companies to help them reduce the sticky cost, improve their cost management level, and get the greatest utilization of resources.