A Study On The Mediator Effect Of Discretionary Expenditure On Free Cash Flow And Cost Stickiness

Cost is the key influencing the enterprises' profit,and impact the earning level,performance evaluation and so on.Cost behavior as an important concept of cost analysis,analyze the relationship between the cost and the yield in number.It is greatly significance to affect the enterprise management.Traditional cost behavior thought that there was a linear relationship between the volume and the cost,but Cooper(1992)found that the cost reduced less when the business fallen,than the cost increased more when the business rose,which called “cost stickiness”.The cost stickiness researches mainly related the existence of the cost stickiness,adjustment costs and managers expected to cost,etc.But there was no researches of how the free cash influences the cost.Therefore,this paper studies how the free cash flow affects different types of the cost stickiness,and discuss the influence of the free cash flow to the enterprise cost stickiness is lagging.We expect to provide suggestion for the establishment of effective corporate governance mechanism through this study.Based on the theory of the cost stickiness and the free cash flow,we analyze the relationship between the cost stickiness and the free cash flow,and the influence of the managers spending free cash flow way to the cost stickiness through the theoretical analysis and the empirical analysis.It is important to understand how the managers spend the free cash flow and the influence of the spending to the enterprises' earning.Based on the domestic and the foreign related literature about the cost stickiness and the free cash flow,combined with theoretical analysis,we put forward three assumptions in this paper,and select the 2011—2015 Shanghai A-share manufacturing enterprises as samples for the empirical test.Research results show that:(1)Operating cost,management expenses exist the stickiness,and the stickiness of management expenses is greater than operating cost.But sales expenses and financial expenses are not significantly.(2)free cash flow for a period after operating cost viscosity and viscosity is significant positive correlation between management cost,and the impact on the management fees viscosity than the impact on the operating cost stickiness.(3)Free cash flow for a period after the randomness of capital expenditure and revenue expenditure exist significant positive correlation between random.(4)The discretionary expenditure has some mediating effect on free cash flow and cost stickiness.Through the free cash flow and the discretionary influence the cost stickiness above,enrich the cost of the free cash flow for the viscous effects of the related researches,improve the cognition of the influence of the managers use free cash flow to the cost.It is a great significance to the internal control and the governance of an enterprise.