Deleveraging, Cost Stickiness and Financial Performance in China

Based on data of Chinese A-share listed manufacturing companies from 2014-2019, we empirically test the impact of deleveraging on companies’ financial performance, and explore the mediating mechanism of cost stickiness. The empirical results show that: deleveraging has a significant positive effect on the financial performance, and cost stickiness plays an intermediary role between deleveraging and financial performance. The deleveraging of state-owned enterprises shows a significant inhibitory effect on cost stickiness. The mediating effect of cost stickiness between deleveraging and corporate performance is more prominent. Our research finds an evidence of how deleveraging on financial performance, and provides theoretical references for companies to deleverage, reduce cost stickiness, and improve performance.