Loss-avoidance, The Nature Of Ownership And Cost Stickiness

Cost stickiness is a hot issue recently receiving more attention.The current study of coststickiness basically using the public data (listed company financial data), the use of suchdata in the stickiness costs reflect the true costs of state circumstances, and the managementdid not consider the impact on earnings manipulation cost stickiness, while ignoring that thedeviation in the estimated costs will largely sticky. This paper considers the presence ofpotential motives to adjust the relevant management personnel resources, especially in thesurplus target to achieve this motive (Loss-avoidance) driven resource adjustments inbusiness volume decline will accelerate the reduction of their slack resources (more thanmaintain the level of its organizational resources necessarily for the proper functioning of theshort-term, including the redundant staff, financial resources and ability to idle unused anduntapped opportunity, etc.), and thus will affect the structure of costs. Whether to ignore theloss-avoidance of the security situation, the cost stickiness in previous studies are likely to beoverestimated, this loss-avoidance motivation will actually reduce the cost stickiness, ratherthan increase the cost stickiness.The nature of ownerships existence of our country, has a specially significant impact onthe cost stickiness and the loss-avoidance motivation, so we further distinguish investigatethe influence of the nature of property rights whether difference, because the state-ownedenterprises agency problem than non-state enterprises is more serious, in the cost of insuranceloss-avoidance motive will be more apparent on sticky.Therefore, we assume thatstate-owned listed companies’ have less loss-avoidance motives; compared with non-state-owned listed companies, state-controlled listed companies tend to adjust resources tomeet the target to Win, the greater the degree of reduction in cost stickiness; given decline inbusiness, loss-avoidance motive is guaranteed to cut costs more aggressively than thosewithout this incentive management, greater cost reduction in the degree of stickiness;compared with non-state-owned listed companies, state-controlled listed companies have nosuch motivation than Win motivated management will more aggressively cut costs, the cost ofa greater reduction in the cost of the degree of viscosity. This paper using basic costs andimproved viscous empirical model, this paper we select2007-2012for all non-financial sectors of non-ST ’s A-share listed companies, on the above assumptions were verified.We found that when faced with the management incentive motivation is to avoid losses,declining profitability, or to meet analysts’ earnings forecasts for the target, which can reduceinsurance profit motive does the degree of cost stickiness, but the effect on the cost was notsignificant, reduce the cost of viscosity plays a big role, the greater the relative non-state-owned enterprises Win motive for the cost of state-owned enterprises to reduce theviscosity of the role of non-state enterprises guaranteed loss-avoidance motive does not seemto play a role. Decline in the volume of business, loss-avoidance motive can really protectmore viscous lower level of costs, but the effect on the cost stickiness is not significant,reduce the cost of viscosity played a big role, relatively non-state-owned enterprisesloss-avoidance motivation cost reduction effect is greater viscosity. We also use the2007-2012changes in costs and expenses and income changes are two, three and four years ofdata for the above test results were robust, and our empirical results are basically consistent,but due to cost anti restructuring costs viscous, cost stickiness quadrennial weakened, somealmost disappeared, which also led to loss-avoidance motivation and the nature of ownershipthe effect on cost stickiness is less noticeable.This article gave us a lot of inspiration:1.awareness and more accurately estimate thecost Stickiness of the enterprise to be considered Loss-avoidance motivation, relativelynon-state-owned enterprises, state-owned enterprises profit motive role of mediator coststickiness of more obvious. When that is the existence of guaranteed profit motive, themanagement even more reluctant to adjust downward slack resources, especially state-ownedenterprises.2.cost stickiness enterprises to some extent reflects the efficiency of resourceallocation, while ignoring the profit motive of this factor, the degree of cost stickiness beenoverestimated China’s enterprises, especially state-owned enterprises. The results show thatmanagers should be based on motivation, especially in resource-driven agency problemsadjusting decisions, to understand the determinants of the company’s cost structure, furtherimprovement in the company’s cost management, improve the efficiency of resourceallocation. State-owned enterprises should further reform, improve the efficiency ofstate-owned enterprise resources.