 The business cycle and cost structure’s adjustment speedBo Zhu and Menglin Yuan Research in International Business and Finance, 2022, vol. 62, issue C Abstract: Using a large sample of Chinese listed firms from 2009 to 2019, we investigate whether firms have a target cost structure and how the business cycle (BC) impacts the cost structure’s adjustment speed. The results show that firms have a target cost structure and adjust dynamically with external macroeconomic conditions. The adjustment speed of a firm’s cost structure exhibits a pro-cyclical effect that firms move faster toward optimal cost structure levels in a boom than in a recession. We find that the positive relationship between BCs and the cost structure’s adjustment speed is more significant for non-state-owned enterprises and firms in cyclical industries. In addition, the degree of financing constraints is an important channel through which the BC affects the adjustment speed. This paper provides compelling evidence for firms’ target cost structures and sheds light on the dynamic adjustment of cost structures. Keywords: Business cycle; Target cost structure; Adjustment speed; Financing constraints (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:62:y:2022:i:c:s0275531922001192 DOI: 10.1016/j.ribaf.2022.101731 Access Statistics for this article Research in International Business and Finance is currently edited by T. Lagoarde Segot More articles in Research in International Business and Finance from Elsevier |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.