Product market competition and cost stickiness: Evidence from China

Li, Jia; Luo, Zhitian

doi:10.1002/mde.3346

Cited by 12 publications

(14 citation statements)

References 49 publications

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“…Enterprises employing cost leadership strategies typically maintain lower adjustment costs and possess more adaptable cost structures [24,25]. CSR initiatives of firms following cost leadership strategies exhibit lower levels of cost stickiness, enabling them to swiftly adjust their CSR efforts in response to external shocks [26].…”

Section: The Moderating Role Of Cost or Differentiation Leadership St...mentioning

confidence: 99%

How Contingency Adjusts Corporate Social Responsibility (CSR) in the Tourism Industry: A Quasi-Experiment in China

Wang,

Zhang,

Wang

et al. 2024

Systems

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Numerous organizational researchers have acknowledged that COVID-19 reduced the profit in the tourism industry. Some tourism firms decreased the cost by reducing the investment of CSR in order to increase the profit. However, the relevant literature remains scarce. The main purpose of this study is to explore the effect of COVID-19 on CSR investment in the tourism industry. This study fills the gap between stakeholder and cost stickiness theories. Based on a quasi-experiment of listed Chinese tourism companies from 2017 to 2021, the study finds that COVID-19 caused tourism firms to increase strategic CSR and decrease a responsive one. In addition, tourism firms that adopted cost leadership strategies trimmed responsive CSR more than strategic CSR. Tourism firms with differentiation leadership strategies increased strategic and decreased responsive CSR. Tourism firms with higher levels of political connections increased responsive CSR, while tourism firms with higher organizational resilience increased strategic CSR. At the theoretical level, this study reveals the theoretical mechanism of COVID-19 on tourism firms’ adjustment of CSR from the perspective of cost stickiness. On a practical level, it helps inform tourism firms’ decision-making regarding CSR adjustments for sustainable development when they face widespread crisis scenarios.

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Section: The Moderating Role Of Cost or Differentiation Leadership St...mentioning

confidence: 99%

How Contingency Adjusts Corporate Social Responsibility (CSR) in the Tourism Industry: A Quasi-Experiment in China

Wang,

Zhang,

Wang

et al. 2024

Systems

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“…Therefore, in the face of declining income, state-owned enterprises often show "no layoff" and "no salary reduction". The constant total number of employees and overall salary objectively determines that the matching raw materials, machinery and equipment, and other material resources will not fluctuate significantly, and stateowned enterprises show strong cost stickiness (Li and Luo, 2021). In addition, the absence of owners and the serious problem of insider control are also important reasons for cost stickiness of state-owned enterprises.…”

Section: Model Designmentioning

confidence: 99%

“…(3) In China, cost management behaviors of enterprises with different property rights are obviously different. Compared with private enterprises, due to political connections, state-owned enterprises are less inclined to layoff or reduce employees' wages when the level of activity declines, showing greater cost stickiness (Boycko et al, 1996;Shleifer and Vishny, 1994;Li and Luo, 2021). The diversity of cost stickiness is more conducive to testing the identification and grasp of cost stickiness by analysts and investors in the process of forecasting.…”

mentioning

confidence: 99%

Cost stickiness, earnings forecast accuracy, and the informativeness of stock prices about future earnings: evidence from China

Sun²

2023

Humanit Soc Sci Commun

Self Cite

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This paper uses the data from the Chinese capital market to study the relationship between cost stickiness, earnings forecast accuracy and stock price information content. The empirical results show that: (1) Cost stickiness significantly affects the earnings response coefficient of stock prices. Lower cost stickiness improves the ability of current returns to reflect future earnings, which is manifested in higher future earnings response coefficient (FERC). (2) Cost stickiness significantly reduces the future earnings response coefficient of non-state-owned enterprises, but does not reduce the future earnings response coefficient of state-owned enterprises. It can be seen that investors have different attitudes towards cost stickiness of listed companies with different property rights in the process of investment decision-making. (3) Cost stickiness significantly increases stock prices synchronicity and decreases the number of company-specific information reflected in stock prices. Further analysis shows that cost stickiness increases earnings forecast accuracy, which is the partial intermediary mechanism for cost stickiness to improve FERC and reduce stock price synchronicity. This paper not only enriches the relevant literature of cost stickiness and earnings response coefficient, but also shows that cost stickiness is an important factor affecting the information efficiency of capital market.

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Section: Hypothesis Developmentmentioning

confidence: 99%

“…The usage patterns of specific assets are unique and difficult to adjust. Therefore, when income decreases, enterprises are unable to reduce the cost of specific assets by selling, leasing or changing their method of use, which results in cost stickiness (Li and Luo, 2021). Under substantive environmental management, enterprises rely primarily on special green investments, including green equipment (Tanaka, 2015) and green employees (Renwick et al, 2013).…”

Section: Hypothesis Development 31 Environmental Investment Growth An...mentioning

confidence: 99%

Environmental investment growth (EIG) and corporate cost stickiness in China: substantive or symbolic management?

Xu,

Liu,

Liu

et al. 2023

SAMPJ

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Purpose Considering the greenwashing risk of symbolic environmental management, this study aims to distinguish the motivation for environmental investment growth (EIG) from the corporate cost stickiness and anti-stickiness perspectives. Design/methodology/approach This study analyzes the impact of substantive and symbolic environmental management on cost stickiness. Subsequently, competing hypotheses are proposed. Finally, empirical tests are conducted on Chinese A-share listed companies from 2010 to 2019. Findings EIG significantly improves enterprises’ cost stickiness. The cost of high EIG enterprises does not decrease significantly with a decline in income compared to other enterprises, which is consistent with the motivation for substantive environmental management. Enterprises with high asset specificity and optimistic management expectations show more obvious substantive environmental management. Government and public environmental concerns cause more pronounced substantive environmental management. Practical implications An evaluation of corporate environmental responsibility should take into account both what the company has disclosed and what it has actually done. Social implications Governments and the public should have a comprehensive understanding of corporate environmental management. They need to strengthen their ability to recognize symbolic environmental management and support substantive environmental management. Originality/value Fundamental to the evaluation of corporate environmental responsibility, this study distinguishes the motivations for corporate EIG disclosures from the cost stickiness perspective to avoid the risk of greenwashing. Hypotheses on the impact of substantive and symbolic environmental management on cost stickiness are presented. This study verifies the substantive environmental management characteristics of listed Chinese companies.

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Product market competition and cost stickiness: Evidence from China

Cited by 12 publications

References 49 publications

How Contingency Adjusts Corporate Social Responsibility (CSR) in the Tourism Industry: A Quasi-Experiment in China

How Contingency Adjusts Corporate Social Responsibility (CSR) in the Tourism Industry: A Quasi-Experiment in China

Cost stickiness, earnings forecast accuracy, and the informativeness of stock prices about future earnings: evidence from China

Environmental investment growth (EIG) and corporate cost stickiness in China: substantive or symbolic management?

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