 Policy uncertainty and cost stickiness: Evidence from IPO suspensions in ChinaYanchun Xia, Junqi Dong and Shijun Guo Economic Modelling, 2025, vol. 151, issue C Abstract: This study investigates the impact of policy uncertainty stemming from initial public offering (IPO) suspensions on the asymmetric behavior of selling, general, and administrative (SG&A) expenses. By analyzing the three latest IPO suspensions in China, we find that IPO suspensions increase the stickiness of SG&A expenses. Furthermore, the amplification of SG&A expense asymmetry due to IPO suspensions is more prominent in companies with higher labor intensity, asset intensity, and sales volatility, and among non-state-owned enterprises. Additional analyses reveal that the correlation between policy uncertainty and cost stickiness diminishes once affected companies complete their IPOs and that IPO suspensions result in poorer post-IPO accounting and stock performance. Finally, we find that different IPO pricing regimes do not affect our baseline findings. Collectively, our results suggest that managers retain slack resources during periods of heightened policy uncertainty in the context of IPO suspensions. Keywords: Policy uncertainty; IPO suspension; Asymmetric cost behavior; Selling; General; Administrative expenses (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:ecmode:v:151:y:2025:i:c:s0264999325002147 DOI: 10.1016/j.econmod.2025.107219 Access Statistics for this article Economic Modelling is currently edited by S. Hall and P. Pauly More articles in Economic Modelling from Elsevier |
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