Economic Policy Uncertainty,managers’ Expectations And Cost Stickiness

In order to mitigate the adverse impact of the external environment and enhance the core competitiveness of the country,governments all over the world guide the allocation of resources through industrial policies.The signal transmission function of government policy combined with management expectation affects the cost stickiness by acting on the investment behavior of enterprises.However,human cognitive ability is limited.Technological progress and the emergence of new industries do not have clear predictability.Policy makers do not know the market better than entrepreneurs,and the government will adjust industrial policies according to technological development and market needs.The strategic decisions made by managers based on the expectation of industrial policies form the production capacity of enterprises,which cannot be changed in the short term,so it may form a certain cost stickiness.Starting from the background of economic policy uncertainty in our country,this paper uses multiple linear regression to study the impact of economic policy uncertainty on cost stickiness and the moderating role of managers’ expectations in their relationship,based on contract theory,real option theory and bounded rationality theory.The sample is listed companies of A-share automobile manufacturing industry from 2014 to 2019.The change of operating cost is an interpreted variable.The uncertainty of economic policy,the change of operating income and the decline of income are explanatory variables.Regulatory variables are expected by managers.Variables such as capital intensity,employee intensity and shareholding ratio of the largest shareholder are control variables.The research results show that: in my country’s automobile manufacturing industry,the uncertainty of economic policies has a positive impact on cost stickiness.Managers optimistic expectations increase cost stickiness,managers pessimistic expectations reduce cost stickiness.Compared with pessimistic expectations,managers’ optimistic expectations can strengthen the positive correlation between economic policy uncertainty and cost stickiness.This paper believes that the possible explanation for the above research conclusions is that the automobile manufacturing industry is a heavy asset industry.In the cost structure of an enterprise,committed fixed costs account for a relatively high proportion.Committed fixed cost is the result of the strategic investment decisions made by the enterprise in previous years,which depends on the management’s anticipation of the policies and the expectation of the future market trend.Committed fixed cost represents the enterprise’s production capacity and cannot be changed in the short term.Therefore,this paper suggests that the government should prudently issue industrial policies and scientifically evaluate the possible economic consequences of industrial policies.Entrepreneurs should treat the government’s industrial policies rationally and make investment decisions based on the scientific judgment of the future development trend of technology.This paper divides managers’ expectations into optimistic expectations and pessimistic expectations,and examines the moderating role of managers’ expectations in the mechanism of economic policy uncertainty on cost stickiness.The research in this paper enriches the research literature of microeconomic consequences of macro-policies and has certain reference value for managers to make cost decisions.