A Study On Cost Stickiness Of Central Enterprises In China

The Traditional models of cost behavior consider costs as fixed(and step-fixed)or variable with a direct relationship between the levels of costs and volume.Recent empirical studies,however,suggest that the relationship between costs and volume is not a‘mechanical'.For examples,Noreen and Soderstrom(1997)empirically documented that cost do not change in proportion with changes in demand,and in some instances cost behavior is asymme-tric.Anderson et al.(2003)were the first to examine this association using large-scale Compustat data and proposed the concept of cost stickiness,that is,costs rise more with increases in activity volume than fall with decrease of the same amount.Put forward the concept has aroused widespread concern in academic circles.The study of cost stickiness provides an important research direction for scholars to carry out cost and management accounting research,and also helps to reveal the cost management behavior of enterprises.So we think study of cost stickiness has important theoretical and practical significance.After more than a decade of research on cost stickiness,the initial phenomenon has gradually shifted to motivation,including adjustment cost,managerial optimism and agency problem.In general,cost stickiness is still a new research area,further study is required.It is very important to study the relationship between corporate governance and cost stickiness,especially the core mechanism of corporate governance: the impact of management incentive on cost stickiness,current research is still scarcity.With the implementation of the Compensation Reform Plan for Central Enterprise Responsible Persons(Reform Plan in short)in early 2015,this paper attempts to explore the impact of the implementation of the Reform Plan on the cost-stickiness of the listed companies in central enterprises.Using the sample of central enterprises listed on the Shanghai and Shenzhen Exchanges from 2012 to 2016,this paper examines the effect of the Reform Plan on cost stickiness.The paper finds:(1)after the Reform Plan,the cost stickiness of central enterprises drops significantly;(2)this relationship is affect by management ownership and ownership concentration of shareholders.While the management ownership and ownership concentration of shareholders is low,the Reform Plan restrains cost stickiness more significantly.