Document Type
Article
Publication Date
3-29-2024
Keywords
Asymmetric cost behavior, Government intervention, Skilled labor
Abstract
Purpose
A country’s institutional environment influences every facet of its business. This paper aims to identify institutional factors (state ownership, government attention on employment and employees’ educational background) that affect the asymmetric cost behavior in China. Design/methodology/approach
Using 2,570 listed firms’ data between 2002 and 2015, we use empirical models to explore the effects of state ownership, government attention on employment and employees’ educational background on the asymmetric cost behavior in China. Findings
This study found that the asymmetric cost behavior of central state-owned enterprises (CSOEs) is greater than local state-owned enterprises (LSOEs). Meanwhile, the empirical results show that government attention on employment is reflected in five-year government plans, and employees’ educational backgrounds are positively associated with asymmetric cost behavior. Originality/value
This study contributes to the economic theory of sticky costs, institutional theory and asymmetric cost behavior literature by providing evidence that shows how government intervention and employee educational background limit the flexibility of corporate cost adjustments. Additionally, this study provides guidance to policymakers by showing how government long-term plans affect firm-level resource adjustment decisions.
Citation
Shan Y, Richardson VJ, Cheng P (2024), "Assessing the asymmetric cost behavior in China". Asian Journal of Accounting Research, Vol. 9 No. 2 pp. 127–138, doi: https://doi.org/10.1108/AJAR-05-2023-0152
Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.
