Research On The Influence Of Cost Stickiness On Enterprise Risk

Under the background of the complex and volatile international economic situation and Chinnese industrial transformation with the upgrading and structural adjustment,Chinnese manufacturing enterprises have experienced the double test of external macro environment and internal operation efficiency.undoubtedly,It have increased corporate risks.In order to achieve long-term development in an increasingly complex environment,companies must control internal risks and maintain operational stability.Enterprise risk is divided into external risk and internal risk based on external factors and internal factors which produce risk.Among the many influencing factors of enterprise risk,the internal risk can control by the enterprise itself,because it have formed by the business management and investment decision.Therefore,the internal risk is the focus of the manager.At present,scholars study the influencing factors of corporate risk from the aspects of enterprise diversification,political connection,managerial characteristics and financial status,and there are few literatures study the impact of risk management on corporate risk.As a matter of fact,cost stickiness can cause problems such as inertia in cost changes,unreasonable resource allocation,and mistakes in managerial decisions,which increase the level of corporate risk.Therefore,it is of great theoretical and practical significance to study the impact of cost stickiness of manufacturing enterprises in China on enterprise risks.This paper uses the literature research method and the empirical research method to study the relationship between cost stickiness and enterprise risk in the manufacturing enterprise.First of all,it begins with systematically combing relevant literature,and summarizes the research status of cost stickiness and enterprise risk.Then,it determine--s the cost stickiness and enterprise risk as the research object,and introduces relevant concepts to clarify the scope of the research,and elaborates the relevant theories.Secondly,we selected 957 observations of 5,572 observations of Shenzhen and Shanghai A-share manufacturing companies from 2012 to 2017.Using principal-agent theory,information asymmetry theory,uncertainty and risk theory,and manager over-confidence theory to analyze the mechanism of cost stickiness and cost anti-stickiness on enterprise risk,and then proposed research hypotheses.Through theresearch on the existing literature,the profit volatility is selected to measure the enterprise risk level.The ABJ model and the WEISS model are used to double-check whether Chinese manufacturing enterprises have cost stickiness or cost anti-stickiness.The WEISS model is measured cost stickiness.Using the correlation analysis,multiple regression analysis and robustness test empirically to study the relationship between cost stickiness and cost anti-stickiness on enterprise risk,and further analyzes the impact of managerial overconfidence on cost stickiness and firm risk relationship,and verifies the hypothesis.Finally,it gives the conclusions and recommendations which based on the empirical results,and limitations and prospects are presented.The results show that the listed companies in Chinese manufacturing industry both have cost stickiness and cost anti-stickiness,and they are evenly distributed among the sample enterprises;the cost stickiness is significantly positively correlated with the enterprise risk;the manager's overconfidence will enhance the effect of cost stickiness and the enterprise risk in positive relationship;cost anti-stickiness is significantly positively correlated with corporate risk.According to the research conclusion,enterprises can reduce their risk level through the following ways.Enterprises should improve enterprise risk management system,incorporate the concept of Cost Stickiness and cost anti-stickiness into risk management system,strengthen managers' professional skills and improve risk identification ability.Enterprises can establish a good internal control system,strengthen the supervision of the board of directors on managers,timely amend managers' overconfidence,reduce managers' self-interest behavior.Managers should improve their ability to predict market economic situation and industry dynamics,make the best use of production capacity and reduce cost anti-stickiness.