Does government deleveraging affect corporate cost stickiness?

Abstract

Asymmetric cost behavior is a significant topic within the field of manage- ment accounting. Adjustments in macroeconomic policies inevitably exert profound influences on corporate management decisions, potentially leading to changes in cost behavior. This paper, grounded in the macroeconomic backdrop of China's deleveraging policy, delves into the potential impact of this policy on cost stickiness at the micro-enterprise level. The study reveals that the enforced implementation of the deleveraging policy has, to some extent, inhibited cost stickiness in enterprises. Variations in the methods and degrees of deleveraging adopted by enterprises result in differing levels of inhibition on cost stickiness. Compared to equity-increasing deleverag- ing, debt-reducing deleveraging demonstrates a more pronounced effect in mitigating cost stickiness. Furthermore, in the heterogeneity analysis, the inhibitory effect of the deleveraging policy on cost stickiness is particularly evident in enterprises with higher external financing dependence, those with- out well-established bank-enterprise relationships, and those subject to in- dustrial policy constraints. This research provides empirical validation and support for the anticipated motivational factors behind cost stickiness within the Chinese context, thereby expanding and deepening the understanding of how macroeconomic policies influence micro-enterprise behavior.