Research On The Influence Of Free Cash Flow On Expense Stickiness

In recent years,the state has vigorously advocated the development of management accounting.For the competitiveness of enterprises,the management and control of enterprise cost and expenses has become an important factor.In recent years,expense stickiness has also become a hot topic in the accounting profession.The comprehensive research on expense stickiness can fully explain the enterprise cost and expense management process,making the relationship between management accounting and financial accounting closer.At present,the study of the reasons for the formation of expense stickiness in the academic circles is more caused by the view of opportunism,and it can also be called the concept of agency problem.It is also the direction and angle of most scholars.After abuse of free cash flow,management involves infringement of shareholders' interests,thereby helping them to obtain more benefits,resulting in a sticky appearance of expense.The internal control and the institutional investors are the core content of corporate governance mechanisms.In theory,this will limit the expense stickiness caused by unreasonable use of free cash flow by management.Therefore,it is necessary to study whether internal control and institutional investors have any inhibition on the positive relationship between free cash flow and expense stickiness.In addition to allowing internal control and institutional investors to have more perspectives on governance mechanisms,they also make expense management more possibilities and are of great theoretical and practical significance.This paper starts with the level of agency theory,and comprehensively expounds the underlying reasons why the company's free cash flow causes management to improperly chase interests and causes expense stickiness.On this basis,it is necessary to explore whether internal control quality and institutional investor shareholding ratio will inhibit management,and impact of the positive relationship between free cash flow and expense stickiness.At the end of the article,the author supports the theoretical analysis as the specific research object of the A-share manufacturing listed companies in Shanghai and Shenzhen Stock Exchange in 2010-2017.Through comparative analysis and empirical analysis,the following questions are specifically verified.First,the existence of the expense stickiness of the listed company;secondly,the expense stickiness is affected by the free cash flow;the next is the different effects of different internal control quality on the relationship between free cash flow and expense stickiness and the different effects of different institutional investors' shareholding ratio on the relationship between free cash flow and expense stickiness.The study found that,in the case of listed companies in China's manufacturing industry,these companies basically reflect the phenomenon of expense stickiness;the company's free cash flow has stimulated the self-interest of management and can promote the expense stickiness;high quality internal control can suppress the positive relationship between free cash flow and expense stickiness compared to low quality internal control;a high proportion of institutional investors hold shares compared to a low percentage of institutional investors can suppress the positive relationship between free cash flow and expense stickiness.Based on this,this paper starts from strengthening the management of free cash flow,improving the internal control system of enterprises,improving the environment of China's capital market,and expanding the scale of institutional investors,and concludes some suggestions by restricting the problem of expense stickiness caused by self-interest of management,and hope to effectively improve the agency issues of management and shareholders,and to optimize and improve the expense management capabilities of the listed companies in China and the company's operating results.