Research On The Influence Of Executive Compensation On Cost Stickiness

When the cost is discussed by the traditional theory of management accounting,it is considered that the relationship between the cost and the volume of sales is a kind of strict unitary function relation.However,this is only a purely theoretical discussion,after a long-term actual production activities and deeply researching by the scholars,they found that in the actual production and operation activities,the changes of cost along with the change of the volume of sales is asymmetrical,which is defined as the cost stickiness by researchers.At present,there are three explanations for its reasons:opportunism causes,long-term contract causes and the efficiency causes.No matter what kind of explanation it is,there is no doubt that the formation of cost stickiness is closely related to human intervention,especially closely related to the subjective decision-making behavior of executives.Most of the existing researches consider that the self-interested behavior of executives which is included by the opportunism causes is the main cause of cost stickiness.According to the incentive theory and tournament theory,this paper argues that the salary can be an effective incentive means,when the company's internal and external business environment changes,it can weaken the tendency of self-interest of the executives;can reduce the control of existing resources by the executives;can adjust arrangements timely;and then make the beneficial decision to the interests of the company,and ultimately reduce the level of cost stickiness.The cost stickiness phenomenon is found in the actual production and operation activities,and the research on cost stickiness is helpful to further understand the cost behavior and solve the practical problems,which has both theoretical and practical significance.Based on the analysis of the existing literature,and according to the transaction cost theory,principal-agent theory,tournament theory and incentive theory,this paper uses data from 2009 to 2015 of China's manufacturing listed companies as the empirical basis,combines the normative analysis and empirical argumentation,and then tries to find out what effect executive compensation will bring to cost stickiness.The conclusion contains three points:(1)the cost of sales and cost of administrative in China's manufacturing listed companies both have sticky phenomenon;(2)the compensation level of core executives has a negative impact on the cost of sales and the cost of administrative;(3)the pay gap within the executive team also has a negative impact on the cost of sales and cost of administrative.According to theresults,there are three suggestions:(1)improving and perfecting internal supervision system;(2)properly enhancing the compensation level of core executives and designing reasonable pay gap within the executive team;(3)establishing a diversified executive incentive system.This paper contains the cost of sales and the cost of administrative when considering the cost stickiness,contains the compensation of core executives and the pay gap within the executive team when considering the executive compensation,and does a more comprehensive analysis of the influence of executive compensation on cost stickiness.Although there are still some deficiencies in this paper,it will still help to further understand and reduce the level of cost stickiness of china's manufacturing listed companies.