The Correlation Between The Real Earnings Management And The Cost Stickiness Of Listed Companies

Cost management is the core of enterprise's continuous operation,and the researches of cost distribution states are beneficial to improve the allocation efficiency of enterprise resources and maintain its stable development.The traditional cost state theory claims that managers do not actively manage the cost,and the changes of cost and income are symmetrical,which have nothing to do with the direction of income change.This theory is inconsistent with the actual cost management behaviors of the managers.In fact,when the cost is varying on an equal degree,managers' conscious earnings management behaviors will make the cost decrease and increase different,and the former is less than the latter,that is,the cost stickiness phenomenon exists.This phenomenon is directly related to the effectiveness of enterprise's cost control,reminding us that we need to break the traditional thinking and reacquaint the laws of cost change.Therefore,it is very important to deeply study the intrinsic mechanism of cost stickiness.Managers' behaviors directly determine management decisions,which are in turn implemented to cost management.In order to maximize their own interests,managers will implement different opportunism behaviors to manipulate the accounting surplus.These behaviors will change cost's normal distribution states,resulting in the cost stickiness.Therefore,more and more scholars begin to analyze the cost stickiness from the perspective of “management behavior”,and explore the causes of cost stickiness from the angle of “earnings management”.There are two main types of earnings management behaviors of managers,namely accrued earnings management and real earnings management.Many literatures are based on accrual management perspective,from the motive of earnings management,to study its impacts on cost stickiness,and there are few literatures to systematically study the cost stickiness from the angle of real earnings management.As a matter of fact,with the implementation of new accounting standards and the intensification of industry supervision,the using space of accrual management is shrinking,and more and more managers tend to use real earnings management behaviors to manipulate profits,which will inevitably affect the distribution structures of enterprise cost.Therefore,it has important theoretical and practical significances to study the effects of real earnings management on cost stickiness,which can not only enrich the research results of the cost stickiness and earnings management,building a bridge between accounting and financial accounting,but also can improve the accuracy of enterprise stakeholders' management decisions.Therefore,this paper uses annual financial data of A-share companies listed on Shanghai and Shenzhen stock exchange in 2009-2015,empirically researches the influences of real earnings management and its means on cost stickiness,and further explores the effects of different motivations including profit,loss and smooth motivation on cost stickiness.The results show that:(1)The phenomenon of cost stickiness is commonly exists in listed companies in China;(2)Enterprise managers may implement real earnings management behaviors for various reasons;(3)Real earnings management behaviors will reduce the cost stickiness,even make it anti-viscous;(4)In terms of real earnings management,a lower abnormal operating cash flow,a lower discretion costs and a higher abnormal production costs would reduce cost stickiness.In which the effects of cost control is greatest;(5)From the steering direction of real earnings management,the managers will take upward real earnings management behaviors to adjust the surplus based on the profit and loss motivation,and implement downward measures to deduct the surplus based on smoothing motivation;(6)Real earnings management behaviors under different motivations have different impacts on cost stickiness.Profit motivation will significantly reduce cost stickiness,loss motive is not obvious;To a certain extent,the smoothing motivation can increase enterprises' cost stickiness.The contributions of this paper are to study the effects of three ways,two directions and three motives of real earnings management on cost stickiness.It provides empirical data for scholars to carry out cost management researches,reminding managers to control the influences of real earnings management' means,directions and motivations on cost stickiness.In the follow-up studies,the article can also introduce other methods or motives to enrich relevant researches,so as to refine the impacts of real earnings management on cost stickiness.