Chain Of Shareholders And Cost Stickiness

As the macro economy enters a new normal and international competition becomes increasingly fierce,the manufacturing industry is facing unprecedented challenges,including shrinking markets,rising costs and pressure to transform and upgrade.In recent years,the massive outbreak and re-emergence of the New Coronavirus,coupled with the impact of global quantitative monetary easing and fiscal stimulus,has led to dramatic volatility in commodity markets,which has posed a huge challenge to the manufacturing sector and made cost uncertainty even more pronounced.In 2003,Anderson,Banker and Janakiraman’s seminal study on cost stickiness in business revealed a valuable ’black box’ of business cost management behaviour.Cost stickiness refers to the difficulty of cutting costs and expenses in the face of rising business volumes,which greatly exceeds the true demand for resources,and in the face of falling business volumes,which leads to a squeeze on profit margins.This in part leads to inefficiencies and increases the risk to the performance of the business,the industry and even the economy as a whole.It is therefore important to address the issue of cost stickiness.The existing literature on cost stickiness focuses on the factors influencing cost stickiness,including adjustment costs,optimistic expectations of managers and management opportunism.The above-mentioned motivations confine resource allocation within a single firm,but firm boundaries are increasingly blurred and linkages between firms arise through multiple informal systems.In the capital markets,shareholders can enter into equity transactions to become shareholders in multiple companies at the same time,i.e.a chain of shareholders,and as such the chain of shareholders serves to oversee governance and link external resources,and is an important form of interaction between firms.Chain shareholders combine their experience,information and resources for their own benefit,creating both a "synergy effect" and an"encroachment effect",which is a "double-edged sword" and can This is a"double-edged sword" that can have an impact on a company’s cost management decisions.Therefore,this paper combines chain shareholders with cost stickiness to examine the impact of chain shareholders on the cost stickiness of listed manufacturing companies.This paper explores the relationship between chain shareholders and corporate cost stickiness by using a sample of manufacturing companies in Shanghai and Shenzhen A-shares in China from 2012-2021.It is found that chain shareholders have an inhibitory effect on corporate cost stickiness.In order to mitigate the impact of endogeneity issues on the findings of the study,this paper adopts the instrumental variables approach,Heckman two-stage model and double difference test(DID)for testing,and the robustness test results after replacing the explanatory and explanatory variables show that the findings still hold.In addition to testing whether chain shareholders can inhibit firm cost stickiness,further research was conducted in this paper,including:(1)Mechanism analysis:examining the pathways through which chain shareholders inhibit firm cost stickiness.It is found that this inhibitory effect is more pronounced in samples with higher asset specialisation,greater environmental uncertainty and higher managerial discretion.This suggests that chain shareholders influence corporate cost stickiness by reducing corporate adjustment costs,easing management optimistic expectations and reducing agency costs.(2)Extensibility tests:from the perspective of regional marketization level,chain shareholders and market environment,as two alternative mechanisms,have different effects on corporate cost stickiness in regions with different marketization levels;from the perspective of the nature of corporate ownership,based on the significant differences in resource endowment and agency problems faced by state-owned enterprises and private enterprises,resulting in different effects of chain shareholders on cost stickiness;from the perspective of In terms of the type of chain shareholders,institutional chain shareholders and individual chain shareholders have different financial strength and talent knowledge reserves,resulting in different effects on cost stickiness.This paper not only enriches the knowledge of chain shareholders as an emerging academic frontier,which is conducive to enhancing the "voice" in enterprises,relying on the resource advantage,information advantage and monitoring role of chain shareholders to promote high-quality development of enterprises;but also provides new evidence for understanding enterprise cost management from the perspective of synergy,which is helpful from the perspective of "cost reduction".It also provides new evidence for understanding enterprise cost management from the perspective of synergy,and helps to provide policy recommendations for promoting supply-side structural reform from the perspective of "cost reduction".