A Study On The Effect Of Ownership Concentration And Internal Control On Expense Stickiness

With the proposal of supply-side reform in China,the most important task of the reform is to "Three Reductions,One Lowering and One Compensation"."One Lowering" means lowering costs.For an enterprise,it is to reduce the cost of the enterprise.Cost is a very important part of the daily management of enterprises,only to maintain a lower cost,enterprises can survive in such a fierce market competition.Therefore,the study of cost management is very necessary for enterprises.Cost stickiness refers to that the proportion of fees falling with the volume of business is less than the proportion rising with the volume of business under the same conditions.Most scholars believe that agency problem is one of the causes of cost stickiness.As an important part of corporate governance,ownership concentration plays an important role in the agency problem of enterprises,so it also has an impact on cost stickiness.Internal control is the control of the whole process of business activities,and is a management and institutional system composed of a series of rules and procedures.Effective internal control will reduce the level of information asymmetry and alleviate agency problems.Therefore,internal control will also have some impact on the cost stickiness of enterprises.In this paper,the ownership concentration,internal control and cost stickiness are put into the same framework to study the relationship between the three by empirical research.Firstly,the paper summarizes the proposition of expense stickiness,its existence,causes and the internal and external governance factors that affect it,so as to have a preliminary understanding of the formation mechanism of cost stickiness.At the same time,the economic consequences of cost stickiness,the economic consequences of ownership concentration,the economic consequences of internal control,the relationship between ownership concentration and cost stickiness,and the relationship between internal control and cost stickiness are summarized.Then it introduces three important concepts,namely expense stickiness,ownership concentration and internal control.At the same time,this paper puts forward four main theoretical basis,namely transaction cost theory,opportunism theory,efficiency theory and principal-agent theory.Then this paper takes the data of A-share manufacturing listed companies from 2012 to 2016 as a sample,using ABJ model and stata12.0 analysis software for reference,empirically studies the relationship among ownership concentration,internal control and cost stickiness of manufacturing enterprises.The conclusions are as follows:(1)There is cost Stickiness in manufacturing enterprises;(2)Equity concentration is positively correlated with cost stickiness;(3)Internal control is negatively correlated with cost stickiness;(4)High quality internal control can reduce the impact of ownership concentration on cost stickiness.According to the conclusion,the following suggestions are put forward:(1)Enterprise managers should understand the concept of cost stickiness and strengthen cost management;(2)Improve the internal control system and improve the quality of internal control;(3)Optimize the ownership structure to prevent excessive concentration of equity.The innovation of this paper is that,on the basis of studying the effect of ownership concentration on cost stickiness,we add internal control as an adjustment variable to explore the impact of different quality of internal control on the relationship between the two.It not only extends the cost stickiness theory,but also enriches the study of the economic consequences of internal control.