Anti-corruption And Corporate Sticky Costs

Cost stickiness is a kind of asymmetric cost behavior,the existance of transaction cost is the primary cause.Transaction costs not only affect the objective environment of enterprise resource allocation decision,but also influence the subjective behavior of management's resource adjustment decisions.The company allocate more resources into assets with higher adjustment costs may lead their costs lack of downward elasticity,and if there exist management opportunism or irrational expectations may cause the magnitude of a change in costs depend on the change direction.Eventually lead to sticky costs.For companies,Corruption affects the transaction costs,and then influences the resource allocation decisions and cost adjustment behavior,finally reflects on their costs behavior.Based on the "helping hand " and "grabbing hand" of corruption to macro enterprise,we further study the impact of anti-corruption to the cost stickiness.The 18 th national congress of the communist party of China is the signal of the beginning of the anti-corruption campaign,which is thought to be an exogenous event to examine whether and how the campaign influence to the cost behavior to the micro enterprise.Our results show that,the degree of stickiness react to anti-corruption are different between total costs and SG&A(Selling,General,and Administrative Costs).The SG&A exhibit less stickiness and more significant in better market environment,However the total costs exhibit higher stickiness and more significant in the poor market environment.We also found that,the improvement of the SG&A stickiness after the implementation of anti-corruption policy is mainly concentrated in the central state-owned enterprises.Nevertheless,these influences are not as significant in local state-owned enterprises and non-state-owned enterprises.This paper supports the following conclusions: the implementation of the new anti-corruption policy has improved the business environment and provided enterprises with the opportunity to increase R&D investments and enhance their independent innovation ability.At the same time,the implementation of the new anti-corruption policy has improved corporate governance,inhibiting the cost stickiness caused by opportunistic behavior and optimistic expectations of management.Our research can help enterprises understand the economic meaning of the system reform to enterprise's cost management,so as to better allocate resources and make more effective management operations,eventually improve corporate performances.At the same time,this paper confirmed the positive effects of anti-corruption policies in our country.Also,to better against corruption,the government need to strengthen the market mechanism and respect it's fundamental role in resource allocation.Which provides empirical evidences to further promote market-oriented reform,helps to reduce transaction costs at the same time.