Stock Price Crash Risk and Corporate Cost Structure Decisions
Corporate cost structure decisions and risk management are prominent topics in the field of business management research.As the risk of corporate stock price crashes increases,how does this affect a firm's cost struc-ture?To this end,this paper takes China's A-share listed companies in Shanghai and Shenzhen from 2009 to 2022 as a research sample to explore the impact of a firm's stock price crash risk on its cost structure decisions.It is found that when at a higher stock price crash risk,firms reduce the elasticity of their cost structure,i.e.,the propor-tion of variable costs is relatively low.The results of the mechanism test indicate that managers will adjust their firms'cost structures towards lower elasticity due to management's optimistic expectations and competitive market pressures.Furthermore,the impact of stock price crash risk on firms'cost structure is more significant in firms with lower institutional investors'shareholding and in non-state-owned enterprises,and stock price crash risk main-ly affects the cost elasticity of the firm's operating cost component,while it does not have a significant effect on the cost elasticity of the selling and administrative expenses.This paper provides empirical evidence on the relation-ship between stock price crash risk and corporate cost structure,extending the boundaries of research related to cor-porate cost structure,and offering important insights into corporate stock price crash risk prevention and cost struc-ture management.
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