Industrial Policy And Enterprise Cost Stickiness

With the development of economy,Chinese enterprises are facing great challenges and pressure in the increasingly fierce competitions.Under the background of the disappearance of demographic dividend,enterprises have to solve how to upgrade the industry structure,allocate the resources effectively and control the cost.Nowadays,China is in the stage of industrial transformation and upgrading,where industrial policy plays a vital role.Based on the information and plans for the future development of the industry,government provides preferential policies such as tax reductions and subsidies to enterprises that meet the policy conditions,and guides resources to selected industries to concentrate on the development of key industries and promote the transformation and upgrading of industries.Differences in policies support between different industries will result in an imbalance between the external development environment and the available resources,which in turn affects the resource allocation behavior and the cost decision of the enterprise.Traditional models of cost behaviors posit a linear correlation between the volume of business and cost.Later,scholars found that the cost increases more when the volume of business increases than when the volume of business declines,this phenomenon was called cost stickiness.Cost stickiness reflects the cost behaviors of the enterprise and is the result of the management's decision on production operation and resource allocation under the fluctuation of the macroeconomic cycle.Therefore,studying the mechanism of industrial policy on the cost stickiness can uncover the black box of internal business decision-making,which has an important practical significance for the implementation of China's industrial policy.Based on the above reasons,this thesis,from the perspective of resource allocation,explores the influence effect and path of industrial policies and its support means on cost stickiness,and further analyzes the heterogeneous of industrial policy.This thesis uses the financial data of Chinese A-share listed companies from 2007 to 2017,and starts with the three “five-year plans” of the central in the “11th Five-Year Plan”,“12th Five-Year Plan” and “13th Five-Year Plan” to conduct an empirical test.Firstly,cost stickiness is measured by total operating costs and the empirical results are found by ABJ model that industrial policy means such as subsidies and tax incentives have a positive impact on cost stickiness.Secondly,the reasons why industrial policy affects cost stickiness from multiple channels are investigated.Specifically,industrial policy and its supporting means aggravate the cost stickiness of enterprises by affecting the resources input in terms of capital,labor force and R&D activities.The results of mediating effect support "industrial policy-enterprise resource allocation behaviors-cost stickiness".Finally,through the comparison among different industry characteristics,the impact of industrial policy on cost stickiness is further obtained.The result illustrates that the relationship between industrial policy and cost stickiness is more obvious in high-growth industries.The contributions of this thesis are as follows: Firstly,the relationship between industrial policy at macro-level and cost behaviors at micro-level is explored,illustrating how industrial policy affects operation decisions of enterprises.Secondly,from the perspective of resource allocation,the transmission mechanisms of cost stickiness are revealed through the change of enterprise behaviors,which explore the causes of cost stickiness deeply.This thesis not only enriches the related research of cost behaviors,but also broadens the impact of macro-economic policy on microcorporate behaviors.