Cost Stickiness And Corporate Risk Taking

The research on cost behavior is the theoretical cornerstone of modern cost and expense dynamic management.The traditional cost theory research advocates that the cost is linearly related to the business volume,and the changes of the two show a completely symmetrical relationship.However,with the in-depth development of academic research,scholars have found through a large number of studies that the real change of cost is not proportional to the change of business volume,that is,the increase of cost when the business volume increases is greater than that when the business volume decreases.This "Cost Stickiness" phenomenon has been widely concerned and valued by scholars at home and abroad.In fact,the existence of this cost stickiness phenomenon is a direct manifestation of the unreasonable allocation of enterprise resources,which will seriously deviate the enterprise cost level from the optimal allocation efficiency of resources,make it difficult for resources to be used efficiently and reasonably in the short term,reduce the operation efficiency of enterprises,affect the value of enterprises,and bring many economic consequences.This paper will focus on the impact of this phenomenon on the risk-taking of listed enterprises in China.Enterprise risk-taking is a decision-making behavior orientation in the process of investment.Appropriate risk-taking can promote the growth of enterprises;Excessive risk-taking will lead to uncontrollable risks and adverse effects on enterprises.There are many factors affecting enterprise risk-taking,and cost stickiness is often one of the important factors that people tend to ignore.Firstly,this paper analyzes from the theoretical level.On the basis of systematically combing the relevant literature,this paper defines the concepts and introduces the relevant theories of cost stickiness,enterprise risk-taking and internal control quality,theoretically analyzes the mechanism of the impact of Cost Stickiness on enterprise risk-taking,and believes that the quality of internal control plays a regulatory role in the process of Cost Stickiness affecting enterprise risk-taking.Secondly,it analyzes the current situation of enterprise cost stickiness,risk-taking and internal control quality in China,so as to provide a practical basis for further empirical research.Finally,it tests the relationship between the three from the empirical level.Taking 7966 observations of 1138 A-share listed companies in Shenzhen and Shanghai from 2014 to 2020 as sample data,the abj model is used to test the existence of Cost Stickiness of listed enterprises in China,the Weiss model is used to measure the specific cost stickiness,and the impact of Cost Stickiness on enterprise risk bearing is empirically studied.On this basis,the quality of internal control is added as the adjustment variable,Study the impact of the quality of internal control on the relationship between Cost Stickiness and enterprise risk-taking.The empirical results show that:(1)cost stickiness is common in China’s A-share non-financial listed companies.(2)There is a significant positive correlation between Cost Stickiness and enterprise risk-taking.(3)High quality internal control helps to alleviate the negative impact of Cost Stickiness on enterprise risk-taking.According to the research conclusion of this paper,in order to help enterprises carry out cost control and determine the appropriate risk-taking level,the following suggestions are put forward:(1)improve the understanding of Cost Stickiness and pay attention to strengthening daily cost management.(2)Improve the corporate governance mechanism and improve the incentive and restraint system of the management.(3)Strengthen the internal control of enterprises and improve the quality of internal control.(4)Strengthen enterprise risk management and bear appropriate risk level.