Cost Stickiness and Severance Costs: the Moderating Effect of Employee Compensation

DOI

10.2991/978-94-6463-811-0_25How to use a DOI?

Keywords

Cost stickiness; Severance costs; Private enterprises; Contract theory

Abstract

This study examines the mechanism through which severance costs affect cost stickiness of enterprise and the moderating role of employee compensation in Chinese private enterprises, grounded in the three foundational theories of cost stickiness and the contract theory. Using the sample of the A-share listed private enterprises from 2008 to 2020, this study implements fixed-effects regression models to analyze the relationship of severance costs cost, cost stickiness and employee compensation. Empirical results demonstrate that severance costs exhibit significant cost stickiness, characterized by asymmetric adjustments where cost reductions during demand declines are smaller than expansions during growth periods, and employee compensation attenuate the positive relationship between severance costs and cost stickiness. These findings contribute to the theoretical understanding of cost management optimization and the evidence-based recalibration of national labor policy frameworks. This study makes dual contributions by both expanding the theoretical boundaries of cost behavior literature and providing actionable organizational-level insights for optimizing employment relationship governance.

Copyright

© 2025 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Meiyi Lv
PY  - 2025
DA  - 2025/08/14
TI  - Cost Stickiness and Severance Costs: the Moderating Effect of Employee Compensation
BT  - Proceedings of the 2025 5th International Conference on Enterprise Management and Economic Development (ICEMED 2025)
PB  - Atlantis Press
SP  - 243
EP  - 250
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-811-0_25
DO  - 10.2991/978-94-6463-811-0_25
ID  - Lv2025
ER  -