Research On The Relationship Between Debt Constraint,Over-Investment And Cost Stickiness

With the continuous development of economy,enterprises are facing great challenges in the increasingly fierce competitions.The rationality of the cost structure plays an important role in the development of the enterprise.So how to upgrade the industry structure,how to allocate the resources effectively and how to control the cost are problems that the successful enterprises have to think about.According to the theory of cost behavior,cost can be divided into fixed cost and variable cost simply.The variable cost will vary with the changes of the business volume and the fixed cost will not change.From this aspect,the cost is affected by the level of business volume,but with further researches,scholars have found that the cost is not only affected by the level of business volume,will also be affected by the degree of managers’ confidence,the macroeconomic situation,the managers’ investment behavior and other factors.These affects make the cost of the enterprise present asymmetric phenomenon in the situation of business volume level increase and decrease.When the business volume increases,the level of the cost increase is greater than when the business volume decreases the level of the cost decrease.This phenomenon is called cost stickiness.The cost stickiness will bring some risks to the enterprise,so how to reduce the cost stickiness of the enterprise becomes the research focus.Due to the cost of the manufacturing enterprises is more important for enterprises,and cost characteristics is significant.So the paper mainly studies the manufacturing industry.The paper uses data from 2011 to 2015 of manufacturing enterprises which listed on China A shares as research samples to verify the existence of cost stickiness and then explores the inhibition way of enterprise cost stickiness.Many scholars study on the inhibition of the enterprise cost stickiness from the perspective of corporate governance.The paper breaks the traditional boundaries of corporate governance and researches the debt constraint’s governance effect,that is whether the debt constraint can decrease the cost stickiness.At the same time,in order to further study the governance mode of debt constraint,the paper adds an intervening variable in the relationship between the debt constraint and the cost stickiness,namely over-investment.Then the paper explores whether the effect of debt constraint on the cost stickiness is through the intervening variable--over-investment.Using the above research samples,we can verify the relationship between debt constraint,over-investment and cost stickiness.The paper use the residual of the Richardson model to measure over-investment and use the ABJ model to research cost stickiness.The study use stata 12 do regression analysis on the research samples and finally draws the following conclusions:China’s manufacturing enterprises exist cost stickiness phenomenon;Corporate debt constraint can inhibit the over-investment behavior of management and then the debt constraint can reduce the cost stickiness,that is the over-investment plays a mediating effect between debt constraint and cost stickiness.Finally,according to the research,the paper put forward policy suggestions.Enterprises can introduce enterprise debt financing and adjust the enterprise’s capital structure.The debt constraint plays a role in corporate governance in the enterprise.It can reduce the cost stickiness,optimize capital allocation and construct the optimal cost structure,then help enterprises stand out in competitions.