Empirical Research On The Influence Of Agency Problem On Cost Stickiness

In recent years, cost stickiness is one of the focus areas of management accounting, this concept has shaken the cost of traditional accounting theory in the basic position of Management Accounting, which attracted the attention of scholars. The asymmetry is when the sales decline, the decrease of cost is less than the increase of cost at the same volume. That is to say the change of cost is not only related to the sales, but also associated with changes in sales direction. Cost stickiness is a modification of the cost of traditional accounting theory, understanding the true relationship and factors between sales and costs can provide a basis for evaluating the company’s resource allocation and cost management efficiency, and help the company build a better cost planning and control systems to help owners to control the management of self-interest motives through cost stickiness, making the company’s decision-making is more conducive to shareholder value. Scholars’ research at home and abroad on the influence factors of cost stickiness mainly focused on the asset-intensive, labor-intensive, ROE and other economic factors, as well as uncertainty of future demand. Research on the influence of agency problem on cost stickiness is very little. Agency problems in the management of the company, mainly for the empire building, through the cost control to increase their own interests, which affect the company’s cost stickiness. There still need a lot of empirical test on what variables could measure the agency problem and what is the relationship between the agency problem and cost stickiness. This paper mainly researches the relationship between the agent and the cost stickiness, and difference between administrative expenses, selling expenses on the cost stickiness.With free cash flow, that year and the following year of management changes, management compensation to measure the agency problem on the basis of the analysis on transaction cost theory, economic man hypothesis, agency theory and the theory of opportunistic behavior, this paper proposes the corresponding assumptions, This paper use the sample of 2008-2013 non ST companies in the Shanghai and Shenzhen A-share market to make empirical study.We find that:(1) SG&A and administrative expenses in China’s manufacturing company behave sticky significantly, while selling expenses behave anti-stickiness;(2) Free cash flow and cost stickiness was significantly positive correlation, mainly in the aspect of administrative expenses;(3) In the year of the senior managerial personnel turnover, the companies’ SG&A and administrative expenses which change senior managerial personnel show higher cost stickiness, whereas selling expenses is no significant difference;(4) In the year after turnover, the companies’ SG&A and administrative expenses which change senior managerial personnel show lower cost stickiness, while selling expenses is no significant difference;(5) Whether considering managerial ownership, executive compensation index and cost stickiness was significantly negative correlation, and the impact on selling expenses was not significant, the impact on administrative expenses was significant.Accordingly, based on the comprehensive study on the agency problem and cost stickiness, this paper raises some proper suggestions to limit the expense stickiness, including cultivating to enhance the quality of managers, optimizing compensation incentive and internal control system, improving corporate governance. This study is aimed to solve the agency problem of management and shareholders and enhance the daily expense management level and business performance of listed companies in China.The contribution of this paper mainly has two points:(1) Based on the different expenses to study the influence of agency problem on cost stickiness, through empirical research it is concluded that the influence of agency problem on cost stickiness mainly reflected in the administrative expenses, no significant impact on the selling expenses;(2)In the selection of indicators, this paper selected the free cash flow, the year and the next year of executive changes, executives monetary compensation and executive compensation structure as substitution variables.