Asymmetric Cost Behavior And Its Impact On Firm Performance

The cost behavior theory is not only the basic content of the management accounting,but also the important decisive factors for managers to carry out cost management,profit forecast and make the development strategy of the enterprise.Traditional cost behavior theory divided all cost into fixed cost and variable cost,establish the corresponding cost function-model y=a+bx,suggesting that there was a linear changes in the relationship between the cost and volume of sales.Marginal rate of change in costs is constant,i.e.the response of tatol costs to increase or decrease in activity is symmetric.However,the traditional cost behavior model only links costs with different levels of sales volume,ignores the process of cost management decisions will affect the process of cost change with the change of the volume.In recent ten years,with the development of the management accounting,scholars found the existence of Cost Stickiness and subsequently scholars found Cost Anti-Stickiness in a few cases.These two kinds of models formed Asymmetric Cost Behavior and confirmed by this feature of the changes in costs is asymmetric for sales rise and fall.Asymmetric Cost Behavior broke the traditional cost behavior theory which conclude a single model,put forward a kind of brand-new comprehensive perspective on cost behavior,including the subjective initiative of the managers.It not only provides a new clue for the scholars to reveal the behavior of enterprise cost management,but also strengthen the relationship between management accounting and financial accounting.It not only provide a reference for managers' decision-making,but also help investors to better understand the accounting earnings information from the perspective of cost behavior.Through the review of the literature at home and abroad,we found that the basic research of Asymmetric Cost Behavior has been relatively mature.However,the area of economic consequences research about the Asymmetric Cost Behavior still has broad prospects.How do Cost stickiness and anti-stickinesscome into being?How does managers' subjective judgment and decision affect the cost with the change of the sales process,and the manager's decision-making is out of what factors and then affect the degree of cost stickiness or anti-stickiness?And in which specific circumstances give rise to cost stickiness and cost anti-stickiness,and what kind of economic consequences they will lead to?These are considered in this paper through summarizing the current analysis of literature theory.Further,the theory should be closely linked to the reality,what is the overall situation of asymmetric cost behavior in A-share Listed Companies in China?What is the distribution of cost stickiness and cost anti-stickiness in different industries?What is the effect of cost stickiness and cost anti-stickiness on the short and long term performance of listed companies in China,and in what range is the most beneficial to the promotion of enterprise performance?These problems are the practical problems that need to be tested by empirical test in this paper.Therefore,first of all,this paper introduces the theory of Asymmetric Cost Behavior,introduces the basic concepts and formation mechanism,reviews domestic and foreign research literature of the basic research and economic consequences of Asymmetric Cost Behavior,summarizes the theoretical framework of Asymmetric Cost Behavior.Second,followed by large sample data of China A-share non-financial listed companies from 2008 to 2015,we test the existenceof sticky cost and anti-stickiness cost,and their industry distribution,and their effect on the performance of enterprises.Through empirical research,this paper draws the following conclusions:(1)China A-share listed companies has an overall cost stickiness.When operating income increase by an average of 1%,the total cost grow correspondingly by 0.8%,while operating income decrease by an average of 1%,the total cost is only fall correspondingly by 0.697%,and the industry respectively showed different degrees of cost stickiness and anti-stickiness;(2)Cost stickiness and short-term performance is negatively related,and an appropriate degree of cost stickiness and firm's long-term performance are positively related;(3)The cost anti-stickiness effect on enterprise short-term performance is ?-shaped distribution.That is,when the cost anti-stickiness in the moderate range,the anti-stickiness and short-term performance has a significant positive correlation.However,when the cost stickiness is too high,although there was a trend that the anti-stickiness and enterprise short-term performance are negatively correlated,but this effect didn't show strong evidence.Finally,based on the research conclusions,this paper puts forward some suggestions on how to control cost stickiness and anti-stickiness to promote enterprise performance.The innovation of this paper is mainly reflected in the research content and research model.In research contents,this paper put cost anti-stickiness into the research field,and sums up the latest Asymmetry Cost Behavior theory,this not only analyzed the formation mechanism and the influence factors of cost stickiness and anti-stickiness,but also studied their economic consequences.In the research model,this paper not only use the classic ABJ model,but also use the latest WEISS model,makes the research results confirm each other,and lay the foundations for studying the economic consequences.The main limitation of this paper is not be able to infer the influences of anti stickiness cost to the long-term performance of the enterprise,so that we do not make empirical research on this relationship,which affected the integrity of the results,and it need to be further studied.