Product Market Competition、Managers Overconfidence And Cost Stickiness

From the time that Anderson. Banker and Janakiraman (2003) called the phenomenon that the increased costs as the volume arise are greater than the decreased costs as the volume drop as cost(expense) stickiness, some scholars develop more researches about this phenomenon on the basis of the research, these achievements offer a new understanding for the cognition limitations of cost behavior division in management accounting. On the one hand, the research on cost stickiness is helpful to reveal the "black box" in cost management activities of enterprises, on the other hand, the research on cost stickiness establishes a bridge between management accounting and other subjects to study their interactions. Cost stickiness is largely influenced by administrators’ cost management behavior. In recent years, behavioral finance springs up, scholars realize that the irrational behavior of enterprises’ regulators and investors may influence business decisions. However, relative to researching the irrational behavior of investors, research on irrational behavior of enterprises’ regulators is far behind. Therefore, it combines behavioral finance and management accounting to study how administrators’ overconfidence influences enterprises’ cost stickiness. One of the causes of cost stickiness generating is the agency problem. namely administrators’ opportunism. Some scholars research that better companies’ internal governance helps to reduce cost stickiness, but very few scholars refer to external governance mechanism. Therefore. it considers one of the important external governance mechanism——product market competition, and study how product market competition influences the relationship between administrators’ overconfidence and cost stickiness.On the basis of combing literature at home and abroad, and analyzing related theory, it chooses the data of listed companies in the year of 2007-2013 to research above questions and the results are shown below:(1) The phenomenon of cost stickiness exists in China’s listed companies; (2) There is a significant positive correlation between managers overconfidence variable and cost stickiness after controlling assets density variable, employees density variable and the macroeconomic environment variable; (3) After controlling assets density variable. employees density variable and the macroeconomic environment variable, when product market competition is more intense, the enhanced effect of manager overconfidence on cost stickiness will decline.At present, scholars at home and abroad are mainly concentrated on studying the characteristics、causes and influence factors of cost stickiness, and influence factor is a hot spot of current research. This paper studies problems related to cost stickiness from the view of behavioral finance——behavior of irrational manager and corporate governance——external governance mechanism. It offers a new entry point for researching influence factor of cost stickiness and contributes to making effective decisions for managers and also helps investors use information effectively, thus improving the management efficiency of enterprise and improving performance.