Study On The Effects Of Ownership Structure And Debt Structure Over Cost-stickiness

Accurate understanding of cost behavior contributes to the formation of more accurate production decision and investment decision. According to traditional cost theory,we know that the cost of the enterprise and business revenue should show a linear relationship, namely y=a+bx."y "stands for the total cost, stands for the fixed cost,"x "stands for the revenue of business. Derivate the both sides of the eqution,we can get the result dy/dx=b.From the result we can find that as a constant the " b" is not affected by changes in the direction of the "x",that is to say the "y"’s marginal rate of change is the same despite the the "x" increases or decreases. Theoretically, if the business revenue rises1%and the cost rises0.7%, then when the business revenue declines1%, cost should decline0.7%too. However, the cost-stickiness problems proposed by Anderson et al in2003has challenged the traditional cost theory. Anderson et al found the cost not only depends on the changing amplitude of revenue but also depends on the changing direction of the revenue. This shows that our traditional cost theory has some misunderstanding of cost behavior. In order to get a more deep understanding of the cost-stickiness to control it better, the paper focus on the study of the effect of ownership structure and debt structure over the cost-stickiness.This paper is structured as follows:the first chapter is the introduction, mainly introduces the research background, research significance, research methods and the innovation point of this article; the second chapter is literature review, the domestic and foreign research results related cost-stickiness are summarized and listed; the third chapter is the theoretical analysis and hypothesis, use the agency theory and the financial straits cost theory and incomplete contract theory to elaborate the affecting mechanism of the ownership structure and debt structure over the cost-stickiness in detail. The fourth chapter is the research design, mainly introduced the ownership structure and debt structure variables interpretation, model design and sample selection; the fifth chapter is the empirical analysis, use the model to test each hypothesis and analyze the results of regression. Besides, the author takes all elements of ownership structure, and debt structure to one model to make the result more accurate; the sixth chapter is the research conclusion and suggestions, mainly summarizes the former research to make the conclusion more clear and puts forward the corresponding suggestion based on the conclusion, finally states the defect of the research.Through the research based on the data from2008to2011of Chinese listing manufacturing corporations, we find that:(1)the degree of state-owned enterprise’s cost-stickiness is higher than non-state-owned enterprises;(2)the company’s top ten stakeholder’s holding rate has a negative correlation ship with the cost-stickiness.it shows that the ownership concentration has obvious constraints function to manager’s self-interest behavior;(3) institutional investors have no obvious effect on the cost-stickiness and this shows that the institutional investors’enthusiasm to company’s management is not high;(4)at present the Managers-shareholding mechanism doesn’t have a significant impact on cost-stickiness in Chinese listed manufacturing corporation, this maybe because the managerial ownership is too low;(5) enterprises’debt can inhibit cost-stickiness by decreasing the corporate liquidity, the debt proportion is higher, the degree of cost-stickiness is lower;(6) different maturities of debt has different impacts on cost-stickiness, current liability has a stronger constraint function on cost-stickiness than long-term liability.(7) bank loan and commercial credit has the same constraint function to cost-stickiness.According to the above conclusion, this paper puts forward the following suggestions:(1) the state-owned asset management department should strengthen the management of state-owned enterprise of our country and design a perfect competitive evaluation mechanism for the agent who is appointed to exercise the shareholder’s rights on behalf of the state;(2)the enterprises which equity is relative dispersion should enhance the equity concentration to restrict managers’ behavior;(3)our government should encourage more enterprises introduce strategic institutional investors into the governance structure to make the institutional investors give full play to the role of solving the agent problem.(4)some listed company should introduce the manager-shareholding mechanism to form a long-term incentive mechanism gradually and enhance managers’ownership properly;(5)we need design a new forecasting model based on the cost-stickiness properties when we want to forecast a enterprise’s performance and at the same time the ownership structure and debt structure should be taken into account.