Industry Competition,Managers Overconfidence And Cost Stickiness

In the traditional management accounting theory,there is a simple linear relationship between cost and volume of business.However,it has been reversed gradually with the development of the modern theory of management accounting in recent years.Many empirical research results have shown that cost stickiness is a widespread phenomenon in real life,which means the rate of cost decline with declining business volume is lower than the one of cost increase with rising business volume.The academic studies about the formation reasons and influencing factors of cost stickiness have never been stopped since the concept was put forward and its existence was confirmed by Anderson et al.in 2003.Through the retrospective analysis of previous research results,it can be found that managers’ cost management behavior have important influence for the change of cost.With the prosperity of Behavioral Finance Studies,many scholars realized that the irrational behavior of managers has an important effect on enterprise decision and brought it into the research framework of cost stickiness.But most of the research is still in the exploration stage and limited to the inside governance factors while the outside governance factors are seldom mentioned.Therefore,we introduce a new dimension of industry competition in this paper to improve the research framework of cost stickiness and make the analysis and explanation about different effect of managers overconfidence on cost stickiness under varying degrees of industry competition,enriching the related studying achievement.Based on the collection and analysis of the related theories and literature,this paper selects the China’s A-share manufacturing listed companies during the period of 2011 to 2015 as samples,measures managers overconfidence by the profit forecast deviation method,improves the classical cost stickiness model,make the study of the existence of cost stickiness and effect of managers overconfidence on cost stickiness among the samples.Meanwhile,the samples are divided into groups by different degrees of industry competition,and we find that cost stickiness is widespread among China’s A-share manufacturing listed companies,the degree of industry competition weaken cost stickiness,managers overconfidence strengthen cost stickiness while the degree of industry competition will weaken this effect.According to the research result,this paper puts forward a series of proposals to help managers improve decision behavior and managerial level to enhance the competitiveness in enterprise.