Research on Financing Constraints and Cost Stickiness in High Capacity Industries — From Empirical Tests of Steel Industry

Abstract

Traditional cost model defines cost and business volume as mutually symmetric relationship. However, scholars, in the process of exploring the cost field proposed, that the range of cost change caused by business volume change is not completely symmetrical, and defined it as cost stickiness. Under financing constraints, enterprises will limit the adjustment cost, which will affect the cost stickiness. This paper selects China's steel listed companies from 2014 to 2018 as research samples. The research indicates that they have cost stickiness, and the cost stickiness of state-owned enterprises is stronger than that of non-state-owned enterprises; the stronger the financing constraints, the weaker the cost stickiness is. Moreover, compared with the central enterprises, the stickiness of provincial enterprises are more significant; when enterprises are under financing constraints, the cost stickiness of stateowned enterprises is more significant than that of non-state-owned enterprises, and that of provincial enterprises is more significant than that of central enterprises. The paper enriches the content of cost stickiness and is helpful for steel industry and other high capacity industries to effectively optimize the cost.