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 AJIBM  Vol.8 No.3 , March 2018
Earnings Management Motivation and Cost Stickiness—Research Based on Private Equity Placement
Abstract: Cost Stickiness means that costs increase more rapidly with an activity increase than they decrease with an activity decrease. This paper focuses on Chinese A-shares listed companies, which implement private equity placement from 2007 to 2016, to study the impact of earnings management motivation of private equity placement on listed companies’ cost stickiness. The results show that the listed companies implementing private equity placement have positive motivation of earnings management, and will cut more costs when the operating income declines, thus weakening their cost stickiness. Further tests find that this weakened effect is more obvious in the state-owned enterprises, and less obvious in the enterprises audited by the big-four.
Cite this paper: Li, Y. (2018) Earnings Management Motivation and Cost Stickiness—Research Based on Private Equity Placement. American Journal of Industrial and Business Management, 8, 597-606. doi: 10.4236/ajibm.2018.83039.
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