Free Cash Flow,Managers' Opportunistic Behavior And Enterprise Cost Stickiness

In recent 20 years,the research on cost behavior shows that,unlike traditional cost behavior models,there is an asymmetric relationship between cost and income.Especially when income is decreasing,the reduction of cost is smaller than that of increase.A clear understanding of the influence factors of cost stickiness will give help to cost analysis and management,ensure the quality and authenticity of profits,ensure the effectiveness of financial data,and enable external investors to better understand the company's internal cost strategy.Because of the existence of the agency problem,managers' opportunist behavior is rooted in company's daily management,which directly affects the cost decision making and is an important factor of the cost stickiness.Managers often take advantage of his position to implement excessive investment and on-the-job consumption for personal gain.Free cash flow is an important condition to promote the growth of managers' opportunism,and there are also studies showing that the increase of free cash flow will contribute to the increase of cost stickiness to a certain extent.It can be assumed that there is a certain influence mechanism between free cash flow,managerial opportunism and cost stickiness of enterprises.This paper mainly studies how the manager's opportunistic behavior and free cash flow have an impact on the cost stickiness and what the influence mechanism is.In order to view the cost stickiness problem more dialectical scientifically,this paper combines the theory of corporate governance,opportunistic behavior,cost stickiness with the theory of free cash flow to analyze the impact of excessive investment and on-the-job consumption on cost stickiness.Based on the data from YQXL and YQFW,the results showed that:(1)The management of excessive investment and on-the-job consumption is positively related to the cost stickiness.Managerial opportunism behavior lead to the cost stickiness significantly increased.(2)There is a positive correlation between the level of free cash flow and cost stickiness.The higher the level of free cash flow is,the more significant the cost stickiness is.(3)There is a positive correlation between the level of free cash flow and the opportunist behavior of the managers,and they are positively related to the cost stickiness.That is,the increase of free cash flow level will aggravate managers' over investment and on-the-job consumption,which will increase the cost stickiness of enterprises.Finally,the relevant policy suggestions are put forward according to the results of case analysis.The enterprise can control the cost stickiness by improving the incentive mechanism,strengthening the company's disclosure effectiveness,improving the transparency of information and the budget system,strengthening supervision of enterprise management and establishing cost management system.After that,it will be easier to improve the internal governance and the effective control of cost effect.Based on the above key points,this paper sets up two internal control processes about managers' opportunistic behavior and free cash flow level for managers to control cost stickiness.