Financial constraints and asymmetric cost behavior

Costa, Mabel D.; Habib, Ahsan; Bhuiyan, Md. Borhan Uddin

doi:10.1007/s00187-021-00314-7

Cited by 12 publications

(2 citation statements)

References 75 publications

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“…H 1 predicts a negative and significant coefficient on OC_STICKY i,t . We take operating costs (OC) (Compustat data item SALEQ minus IBQ) because it is more comprehensive, as it includes costs related to both internal and external financing (Costa et al, 2021). Moreover, operating costs are incurred for everyday business operations, and failure to meet these contractual obligations could lead to early bankruptcy (Chen et al, 2019).…”

Section: Empirical Modelmentioning

confidence: 99%

Cost stickiness and firm value

Costa

Habib

2023

J Manag Control

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In this paper we explore the association between cost stickiness and firm value. Using a large sample of U.S. data, we find a robust negative relationship between cost stickiness and firm value. We then explore whether the resource adjustment, managerial expectations, and agency theories of cost stickiness affect the negative relation and find support for the managerial expectation and agency theories. Furthermore, we find evidence that the detrimental impact of cost stickiness on firm value is mediated partially through the cost of equity and cash flow channels. Further investigation suggests that the adverse effects of cost stickiness on firm value is stronger in the presence of high information asymmetry. We enrich the cost management literature by integrating cost stickiness with corporate finance.

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Section: Empirical Modelmentioning

confidence: 99%

Cost stickiness and firm value

Costa

Habib

2023

J Manag Control

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“…Drawing lessons from Yuan [57] and Li et al [58], we select some FOE control variables such as enterprise scale (Size), enterprise debt (Lever), enterprise profitability (Roa) and family control (Fhold). To further investigate the influence mechanism of government subsidies on FOE innovation, we refer to the practices of Liu et al [49] and Costa et al [59], construct a financing constraint index (Sa), and introduce profit risk (Irisk) and state-owned participation (Gsta). The statistical descriptions of the variables are shown in Table 2.…”

Section: Datamentioning

confidence: 99%

Innovation of Family-Owned Enterprises and Government Subsidies: From A Policy-Oriented Perspective

Zhao

2022

Sustainability

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This paper investigates the influence effects of government subsidies on the innovation of family-owned enterprises in China through a panel data model and Heckman two-stage model, and explores the possible influence mechanisms of government subsidies on different innovation behaviors of family-owned enterprises through a mediation analysis method. It is found that government subsidies play a significant role in promoting innovation input, innovation quantity and innovation quality of family-owned enterprises. From the perspective of innovation quality, government subsidies are more beneficial to family-owned enterprises without “two jobs in one” or “2nd generation succession”. Compared with family-owned enterprises that have completed intergenerational inheritance, government subsidies are more conducive to enhancing the innovation quantity of family-owned enterprises that have not achieved “2nd generation succession”. We find also that government subsidies can indirectly improve the innovation quality of family-owned enterprises by increasing the proportion of state-owned shares and easing the financing constraints. By organically integrating two relatively independent research fields (effectiveness of government subsidy and innovation of family businesses), this paper opens up a new way of thinking for exploring the sustainability of family businesses.

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Local party committee and labor cost asymmetry

Cai,

Hajikhanov,

Kaspereit

et al. 2024

J Manag Control

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Chinese state-owned enterprises (SOEs) operate under seemingly incompatible logics of economic and noneconomic objectives and thus within a setting of institutional complexity. This complexity manifests in the coexistence of the modern enterprise system and a firm-level Local Party Committee (LPC). LPCs check proposals from a political standpoint before executives decide on economic feasibility. We provide evidence that SOEs with more LPC participation exhibit greater labor stickiness, and this association is more pronounced after the enactment of the Labor Contract Law in 2008, when LPCs became more focused on noneconomic objectives. Additional analyses reveal that regional differences in market-based institutional quality moderate the association between LPC participation and labor cost asymmetry. Our results are relevant for emerging market investors who attempt to incorporate cost asymmetry into their profitability forecasts and for other stakeholders who strive to understand and anticipate the impact of the complex Chinese institutional setting on cost behavior.

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Financial constraints and asymmetric cost behavior

Cited by 12 publications

References 75 publications

Cost stickiness and firm value

Cost stickiness and firm value

Innovation of Family-Owned Enterprises and Government Subsidies: From A Policy-Oriented Perspective

Local party committee and labor cost asymmetry

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