Research On Executive Compensation Incentive Mode And Cost Stickiness Based On Enterprise Life Cycle

The cost and expense theory shows that there is a linear relationship between cost changes and business volume.The total amount of variable expenses is commensurate with the amount of business increase and the amount of reduction.However,the study found that the subjective decision-making of the operators and objective environment will affect the cost with the business.The speed of the quantity change makes the cost and the business volume have an asymmetrical relationship.The marginal increase of the cost when the business volume increases is greater than the marginal decrease when the business volume decreases,that is,the cost stickiness.Because the cost stickiness is closely related to the manager's decision,and the executive's decision will consider the maximization of their own utility,therefore,giving some incentives to senior executive,and properly motivated,can reduce self-interest,more for the interests of the company,and balance between their own interests and the interests of the company,so as to reduce the cost stickiness.As far as enterprises are concerned,the important ways of executive incentive are monetary compensation and equity incentive,and because of the differences in the positioning and operating objectives of enterprises at different stages of their life cycle,there are also differences in the ways of executive incentive.Therefore,this paper attempts to explore the direction and extent of the influence of different executive compensation modes on the stickiness of management fees and sales fees at different stages of enterprise life cycle.In order to improve the cost management of enterprises in different life cycle stages,some suggestions are put forward.This paper chooses manufacturing companies from 2007 to 2017 as samples and establishes an econometric model by referring to Anderson's method.Firstly,it tests the existence of Cost Stickiness of listed manufacturing companies.On this basis,it divides the sample companies into four different life cycles by cash flow method,and uses correlation analysis and regression analysis to explore the effect of different executive compensation incentives on costs.The effect of viscosity.Theresearch finds that: the Cost Stickiness exists basically in the listed manufacturing companies in China;the short-term monetary compensation and long-term equity incentive in mature period can restrain the cost stickiness,and the restraining effect is the strongest,while in other life cycle stages,the short-term monetary compensation and long-term equity incentive have opposite effects on the cost stickiness,resulting in the weakening of the overall restraining effect.On this basis,this paper proposes that managers should formulate different salary strategies and cost management modes for different life cycle stages,especially learning from mature enterprises,making salary incentive schemes and cost management modes according to mature salary modes.