Earnings Targets,Management Incentives And Cost Stickiness

Cost stickiness is the most intuitive manifestation of business volume and cost change.Controlling stickiness becomes the problem that must be faced by business managers.At present,most scholars study the causes of cost stickiness based on the opportunism theory under the agency problem.There are not many relevant studies on whether the management incentives for the surplus target can cause cost stickiness.This article takes the Shanghai-China and Shenzhen A-share listed companies from 2006 to 2016 as the research object,using empirical analysis as the research method,and discusses how the intentional resource adjustment of managers affects the cost stickiness.The results of the study show that when managers face incentives to avoid losses or declines in earnings or to meet financial analysts' earnings forecasts,they will accelerate the downward adjustment of idle resources due to falling sales.This behavior reduces the degree of cost stickiness instead of inducing cost stickiness.The results of the study provide management implications for corporate cost decision making.Managerial incentives should be considered as one of the factors that influence the cost structure of the firm,and this factor is driven by the resource adjustment decision of the surplus target.