Journal of Chuxiong Normal University ›› 2021, Vol. 36 ›› Issue (4): 129-139.

• Management Studies • Previous Articles     Next Articles

Empirical Study on Influence of Internal Control and Agency Cost on Cost Stickiness

CHEN Gen1, TAN Haixia2   

  1. 1. School of Management & Economics, Chuxiong Normal University, Chuxiong, Yunnan Province 675000;
    2. School of Management, Yunnan Minzu University, Kunming, Yunnan Province 650500
  • Received:2021-04-25 Online:2021-07-20 Published:2021-07-23

Abstract: Existence of cost stickiness breaks traditional cost behavior, bringing cost closer to actual changes of cost, which, as the linkage between financial accounting and management accounting, is of great importance to a business in its own right. Based on empirical evidence of companies listed on the Chinese stock exchanges between 2012 and 2018, this paper is a study on cost stickiness from the perspectives of internal control and agency cost with the help of ABJ model. It is found that 1) quality of internal control has notable influence on cost stickiness: the better the internal control, the greater its inhibition to cost stickiness; 2) both the first kind and second kind of agency cost can increase the cost stickiness of a business; and 3) internal control and the two kinds of agency cost have opposite effects. Understanding of the effects of internal control and agency cost on cost stickiness can help a business control cost effectively to reduce operational risks and enhance decision-making efficiency.

Key words: cost stickiness, internal control, agency cost, business management

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