Research On The Relationship Between Earnings Management, Institutional Investors And Expense Stickiness

Cost stickiness is defined as the increase of cost when the volume of business increases than the decrease of the amount of business.Since the concept was put forward,scholars at home and abroad have interpreted and developed the concept.With the increasingly fierce market competition,cost and cost management has become an effective means for enterprises to obtain higher business performance and stronger market competitiveness,but at the same time,cost management is also a link that is more difficult for enterprises to control and manage.Compared with other countries,China's securities management system is more strict and slightly different.Therefore,when the current economic performance of listed companies is poor,even when the profits are negative,the listed companies have strong motivation to carry out earnings management behavior.For example,"bigbath" behavior refers to the current profit is negative,the enterprise by raising the current cost level,for the next year to provide a huge profit space,so as to achieve a turnaround.In addition,at present,most of the researches on cost stickiness are focused on the positive earnings management behavior in our country.Only a few scholars and related literatures do the research on the negative earnings management behavior to the expense stickiness.As an increasingly important force in the capital market,institutional investors will play a very important role in corporate governance and fee stickiness.Therefore,this paper attempts to study the effects of negative earnings management behavior and institutional investors on the cost stickiness.Based on the analysis of the influence of negative earnings management(bigbath)on the cost stickiness,this paper brings institutional investor supervision into the framework of the analysis,which broadens the content of the research on the cost stickiness.and introduces the factor of institutional investor.This paper studies that institutional investors can take part in corporate governance to reduce the behavior of management earnings management out of self-interest,so as to regulate the cost stickiness and provide a new basis for the company to better carry out the cost management.In terms of real value,this paper studies the data of all listed companies in Shanghai Stock Exchange and Shenzhen Stock Exchange(excluding abnormal data,18081 data)from 2007 to 2016.The following results are determined:1.The listed companies do have fee stickiness.2.The management,out of self-interest,will use earnings management to take a shower and endanger the performance of the company.By enhancing the cost stickiness.3.The institutional investors can effectively supervise the management earnings management behavior,thus restrain the cost stickiness.Therefore,listed companies can use institutional investor supervision to better control the earnings management behavior.