Study On The Influence Of Cost Structure On Firm Performance

Profit is the balance of income after deducting cost,so there is a close relationship between profit and cost.From the perspective of economic practice,the operating cost of Chinese enterprises has been maintained at a high level,which has greatly compressed the profit space of enterprises and hindered the improvement of enterprise performance.The government attaches great importance to this and helps enterprises reduce costs through tax and fee reduction policies in recent years.Although these policy tax and fee cuts can help enterprises reduce their cost burden and improve their performance to some extent,this is ultimately temporary.The key to reduce the cost of the enterprise also lies in the enterprise itself,the enterprise needs to improve the cost management level to achieve the purpose of continuously reducing the cost of the enterprise.As we all know,the prerequisite of cost management is to recognize the law of cost behavior.At present,the academic research on cost behavior mostly focuses on the field of “cost stickiness”,while the research on “cost structure” is relatively few.Therefore,this paper will discuss the law of enterprise cost behavior from the perspective of cost structure,so as to improve the effectiveness of enterprise cost management and ultimately achieve the purpose of improving enterprise performance.Based on the definition of cost structure,this paper reviews the relevant literature on the factors affecting cost structure and economic consequences at home and abroad,and takes the A-share listed companies in Shanghai and Shenzhen from 2007 to 2021 as research samples to test the impact of cost structure on enterprise performance.Since there are significant differences in the operating characteristics and performance of enterprises in different life cycles,this paper also examines the impact of cost structure on enterprise performance from the perspective of life cycle classification.The results show that the proportion of fixed costs is positively correlated with firm performance,but the impact of cost structure on firm performance varies with the stage of firms life cycle.Firms in growing and mature stages will improve their performance by increasing the proportion of fixed costs,while firms in recession stage will have no significant impact on their performance.The test results after further market segmentation show that when the market is on the rise,the proportion of fixed costs is positively correlated with enterprise performance,and when the market is on the decline,the proportion of fixed costs is positively correlated with enterprise performance,fixed cost has no significant positive effect on firm performance.Based on the empirical results,the article believes that the enterprise management should pay great attention to this.In the process of allocating cost resources,it is necessary to combine the life cycle stage of the enterprise and the market conditions of the enterprise.That is to say,when the enterprise is in the growth and maturity stage or the market conditions of the enterprise show an upward trend,it can moderately increase the proportion of fixed costs and seize market opportunities to improve enterprise performance.However,when the enterprise is in the recession period or its market situation shows a downward trend,it should timely reduce the proportion of fixed costs,avoid resource waste,so as to stabilize the enterprise performance.The innovation points and research significance of this paper are as follows:(1)Enrich the research literature on cost structure,provide theoretical reference for relevant research in the academic circle,and also provide empirical support for business decision-making of enterprise management;(2)Innovation of constitutive decomposition method can solve the data bottleneck problem in cost structure research to a certain extent.