Research On The Influence Of Accrued Earnings Management On Cost Stickiness

The traditional cost behavior model assumes that there is a linear function relationship in the changes between the cost and volume of business. However, the existing scholars find that the cost behavior model is too simplistic and contrary to the actual business activities. The linear relation between costs and volume of business does not always exist. The magnitude of the increase in costs when b usiness volume increases is higher than the magnitude of the decline in costs when business volume decreases, that is to say, cost stickiness phenomenon exists. The phenomenon lets us re-examine cost management and expense control, and deeply analyzes the internal mechanism of cost stickiness.Based on this, this paper studies the effects of accrued earnings management behavior with different regulatory mechanisms on cost stickiness and the differences between companies on different nature of property rights, with the data of China’s capital market. Studies show that cost stickiness phenomenon exists in China’s state-controlled and non-state-controlled listed companies, and there is a certain degree of viscosity differences; upward adjustments of accrued earnings management behavior weaken company’s cost stickiness and downward adjustments of accrued earnings management behavior enhance company’s cost stickiness. Meanwhile, with regard to listed companies on different nature of property rights, the effect of accrued earnings management on cost stickiness are still different. Specifically, compared with non-state-controlled listed companies, when we use Small Profit to measure upward adjustment of accrued earnings management behavior, the effect of state-controlled listed companies’ accruals earnings management behavior on cost stickiness is more significant; compared with non-state-controlled listed companies, state-controlled listed companies’ downward adjustment of accrued earnings management behavior will contribute to enhance company’s cost stickiness more significantly. This study has important theoretical and practical significance in-depth understanding of the inherent logic of cost dynamic adjustment of the listed companies on different nature of property rights.The main contributions of this paper are as follows:(1) As for research content, this paper enriches research on effect of earnings management behavior on cost stickiness. Compared with previous studies, this paper not only further distinguishes upward and downward adjustment of accrued earnings management behavior, but also shows that the upward adjustment of accrued earnings management behavior will cause cost stickiness be underestimated.(2) As for research perspective, this article explores the mechanism of accrued earnings management on costs stickiness from the perspective of the different nature of the actual controllers, and studies the effects of accrued earnings management behavior on cost stickiness and the differences between companies on different nature of property rights, which provides empirical evidence for the study on characteristic differences of cost stickiness behavior in C hina’ state-controlled and non-state-controlled listed companies.Of course, there is still some short-comings, for example: the small time span of the selected sample in this paper, it may affect the reliability of the conclusions of the study, even though, we still believe this article will contribute to solve the problem of cost stickiness in China’s listed companies.