Study On The Influence On The Enterprises Performance Of Cost Stickiness

In recent years, scholars have discovered through empirical research that costs are not linear behavior when business volume changes,which is different from the traditional cost theory. Cost stickiness is that, the marginal rate of changes is asymmetric when the business volume changes in different directions. And asymmetric marginal rate of change means that when business was reduced, the cost reduction is less than the cost increases with the same amount of increased business volume. It has led to the new thinking about our traditional cost accounting theory behavior assumptions. Existing research from various angles proved that cost stickiness is existing in different countries, different industries, different regions of the enterprises. However, there are less researches about what economic consequences the cost stickiness will bring. This paper argues that only a clear understanding about what kind of impact cost stickiness will produce to the enterprise can take full advantages of the beneficial effects of cost stickiness and minimize the adverse effects of cost stickiness.Firstly, this paper sorts the study of literature at home and abroad to understand the current research results and the lack of research, so as to form the starting point of this article: cost stickiness has impact on firm performance. And according to the principal-agent theory, asymmetric information theory, transaction cost theory and signal theory, this paper analyzes the theoretical basis of costs stickiness and corporate performance as well as different approaches of improving cost stickiness. Then, we analyze present situation of cost stickiness in recent years to understand the characteristics of cost stickiness. On the basis, we conduct a model to study the cost stickiness impact on current performance and the performance of next year. At the same time, further exploration is conducted to seek for different ways of improving and adjusting cost stickiness degree from board structure, ownership structure, assets and liabilities structure and help enterprises avoid disadvantages.This paper conducts empirical study using the data of 2010-2013 Shanghai and Shenzhen A-share listed companies in manufacturing. Empirical results show that:(1) The cost stickiness exists in China’s listed companies and the cost stickiness of manufacturing is the highest;(2) The relationship between cost stickiness and the current performance is not significant;(3) The relationship between cost stickiness and the performance of next year is an inverted U-shaped relationship, and we can calculate a turning point according to the model. When company’s cost stickiness is in the(0, a] range, enterprise performance of next year increases with cost stickiness increasing. In this situation,cost stickiness help improve corporate performance. When the company’s cost stickiness is higher than ―a‖, the decline of the cost would be too slow, which not only affects the efficiency of business decision-making but also reduce the next year performance of the enterprise; Through this model and three years’ manufacturing data of China, this paper estimate the turning point gathered around 1-2, so the companies can controll cost stickiness within(0,1] range, to improve enterprises performance of next year;(4) The cost stickiness can be adjusted and improved by different ways. Size of the board, non-current assets intensity will enhance the cost stickiness behavior with a positive correlation to the cost stickiness; The proportion of independent directors, ownership concentration, current asset turnover, current liabilities ratio will weaken costs stickiness behavior with a negative correlation to the cost stickiness; The effects of the proportion of executives holding and asset-liability ratio on cost stickiness is not significant.Finally, based on empirical results, this paper presents recommendations that companies can adjust and improve cost stickiness to the beneficial range though the different ways presenting in this paper, so that cost stickiness can play an active role to enterprise performance.