Study On Cost Stickiness Of Chinese Listed Corporation

Cost stickiness is that, the relative magnitude of an increase in costs for anincrease in business volume is greater than the relative magnitude of a decrease incosts for a decrease in business volume. In other words, cost stickiness refers to whenthe costs with business volume changes, its marginal rates in different businessvolume change direction asymmetry. This is against the tradi tional cost model whichassumes costs increase or decrease equally with the volume of business increased ordecreased.There are two innovations in this paper. First, explaining cost stickiness withProspect Theory in the field of behavioral economics; second, analyzing thesubjective and objective factors to cost stickiness systematically. Prospect Theoryputs forward a new view to explain cost stickiness. Cost stickiness is influenced bymany factors, and the degree of factors’ influence is radically different. The analysisof factors can help enterprises to improve their level of cost control, and to increasetheir economic efficiency.This paper selects Chinese512listed manufacturing companies sample data from2007to2011, and tests and analyses the existence of cost stickiness and subjectiveand objective factors that influence. The results show that: Cost stickiness ofmanufacturing listed companies in China is existed; the interval N respects for4yearappears decreases.; Equity Concentration, Macroeconomic environment quality andAsset-liability ratio are negatively related to the cost stickiness; Current assets ratioand Capital intensity are related to cost stickiness. At last, according to the results ofthe empirical analysis in this paper, we put forward policy recommendations tominimize cost stickiness from the subjective and objective aspects, for improving thelevel of enterprise cost management and the largest using of va rious resources of theenterprise.