A Research On Influencing Factors And Improvement Of Firm’s Cost "Stickiness"

Traditional cost model is easy to understand, giving managers an intuitive understanding, but it is tooidealistic to reflect the true state of cost. Scholars found that in recent years, changes in cost and volumedoes not show a simple linear relationship, especially when the volume goes down, the amplitude of costreduction cannot be achieved compared with the amplitude of cost increase when the volume goes up. Thepioneering research of cost stickiness sparked a revolution in the field of cost management, as well asprovided a new perspective for business managers to correctly understand the daily operations costmanagement.Based on systematic view, the paper looked back on the relevant theories of domestic and foreignscholars about the cost stickiness, influencing factors and research methods, then use the principal-agenttheory, incomplete contract theory and transaction cost theory to analyze the causes of sticky cost andverify the exist of cost stickiness in manufacturing listed firms; In the view of macro, meso and microlevels, the paper analyzed the potential influenc ing factors, and the influence mechanism between structuralcharacteristics of the board of directors, shareholding, assets and liabilities and cost stickiness behaviorwere discussed in detail; Setting up two-phase model and using OLS method, the paper identified the effectof micro factors,and compared the impact differences on cost stickiness behavior of operating costs andselling and administrative expenses; Finally, based on results from empirical research, the paper providedtheoretical guidance for improvement of cost stickiness. The main research contents and conclusions are asfollows:Firstly, the analysis on cost stickiness existence of Manufacturing listed firms and subdivision industryfirms: Using cost stickiness existence model to test the sticky degree of manufacturing listed firms. Testresults showed that after eliminating effect of inflation, the total cost, operating cost and selling&administrative expense of the manufacturing listed firms still appeared the cost stickiness phenomenon, andthe sticky degree was respectively-0.096,-0.061and-0.105. By comparison, the sticky degree of selling&administrative expense was greater than that of operating cost. Meanwhile, the analysis of subdivisionindustry showed that cost stickiness existed in the most different manufacturing industries, and some of fewappeared a little cost anti-stickiness phenomenon.Secondly, the empirical research on the effect of micro factors based on OLS: using the influencingfactors model to identify the effect of the factors. The results pointed that the board size and density ofnon-current assets had a positive correlation with the stick degree of total cost. And proportion ofindependent directors, ownership concentration, current assets turnover, debts scale and current liabilities ratio had a negative correlation with the stick degree of total cost. The influence coefficient of managementequity ratio to total cost stickiness was-0.002, although not by a significant test, but further study ofrobustness tests showed that the proportion of managerial ownership should not be too high.Thirdly, a comparative study through the perspective of different cost types: the comparison of theeffect of different factors on operating costs and selling&administrative expenses sticky found, the boar dsize, management equity ratio, current assets turnover and debts scale had the same impact on coststickiness of different types of cost. The proportion of independent directors, ownership concentration (topfive shareholders stake), the density of non-current assets and current liabilities ratio of the dens ity had thedifferent impact on cost stickiness of different types of cost.Finally, based on the results of empirical research and the advanced experience from home and abroad,combing with the actual situation of China’s listed companies, the proposed several suggestions to helplower the sticky degree, such as enhancing the quality of the board, arranging the ownership structurereasonably, enhancing the asset liquidity, utilizing the monitoring effect of liabilities, improving theexternal regulatory environment.