Empirical Research On The Influence Of Executives Compensation On Cost Stickiness

Cost management is an important part of financial management in enterprise.Study of the cost can not only help managers make more precise production decisions and investment decisions in a complex environment,but also contribute outside investors and stakeholders to make effective performance prediction.According to the traditional cost behavior,we know that the cost and revenue should be a linear relationship.However,many scholars find the empirical data does not support this view,and they have found the fact that the increase of cost is more than the decrease of it at the same volume.With reference to the concept of viscosity in economics,Anderson and his friends named it ‘cost stickiness'.The concept of stickiness has changed our traditional cognition of cost,and become a hot topic in academia.In addition to discussing the existence,nature and influencing factors,scholars have also studied the economic consequences of cost stickiness,such as the influence on accounting earnings,corporate performance,debt,and so on.Many scholars believe that the agency problem is the main factor that leaded to cost stickiness,and the effective way to reduce it is to establish a reasonable incentive mechanism,such as the salary incentive.At present domestic scholars have studied the executive pay level,pay structure for cost stickiness,but the research on relation of different types of compensation and cost stickiness is less.In this paper,from the perspective of reducing agency cost,we compare the influence of the two incentive ways to cost stickiness in the different nature of property rights,hoping to enrich the relevant research of cost stickiness and incentive mechanism.Because of the 2007 current accounting standards,we select financial data of the A-share listed companies from 2008 to 2015 to test the existence of the cost stickiness,and compare the influence of the two different incentive ways to the cost stickiness in the different nature of property rights.We have found that:1)cost stickiness is common in our country,and the cost stickiness of state-owned enterprises is commonly higher than the one of non-state-owned enterprises;2)monetary compensation can decrease cost stickiness both in state-owned enterprises and non-state-owned enterprises;3)equity compensation can decrease cost stickiness,but the negative relationship is not significant in state-owned listed companies.According to the conclusion,we propose improvements to reduce cost stickiness.Finally,we also point out the limitations of this paper,and give the future study directions of cost stickiness.