Local party committee and labor cost asymmetry

Cost asymmetry; Determinants of cost asymmetry; Institutional complexity; LPC participation; Management Information Systems; Accounting; Strategy and Management; Management Science and Operations Research; Management of Technology and Innovation

Abstract :

[en] Chinese state-owned enterprises (SOEs) operate under seemingly incompatible logics of economic and noneconomic objectives and thus within a setting of institutional complexity. This complexity manifests in the coexistence of the modern enterprise system and a firm-level Local Party Committee (LPC). LPCs check proposals from a political standpoint before executives decide on economic feasibility. We provide evidence that SOEs with more LPC participation exhibit greater labor stickiness, and this association is more pronounced after the enactment of the Labor Contract Law in 2008, when LPCs became more focused on noneconomic objectives. Additional analyses reveal that regional differences in market-based institutional quality moderate the association between LPC participation and labor cost asymmetry. Our results are relevant for emerging market investors who attempt to incorporate cost asymmetry into their profitability forecasts and for other stakeholders who strive to understand and anticipate the impact of the complex Chinese institutional setting on cost behavior.

Disciplines :

Accounting & auditing

Author, co-author :

CAI, Yuwen ; University of Luxembourg > Faculty of Law, Economics and Finance > Department of Economics and Management > Team Thomas KASPEREIT

HAJIKHANOV, Nijat ; University of Luxembourg > Faculty of Law, Economics and Finance > Department of Economics and Management > Team Anke MUESSIG

KASPEREIT, Thomas ; University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Department of Economics and Management (DEM)

Müßig, Anke; Department of Economics and Management, University of Luxembourg, Luxembourg, Luxembourg

External co-authors :

Language :

English

Title :

Local party committee and labor cost asymmetry

Publication date :

2024

Journal title :

Journal of Management Control

ISSN :

2191-4761

eISSN :

2191-477X

Publisher :

Springer Science and Business Media Deutschland GmbH

Peer reviewed :

Peer Reviewed verified by ORBi

Additional URL :

https://link.springer.com/content/pdf/10.1007/s00187-024-00380-7.pdf

FnR Project :

PRIDE17/12251371

Funders :

Fonds National de la Recherche Luxembourg

Funding number :

PRIDE17/12251371

Funding text :

Funding was provided by Fonds National de la Recherche Luxembourg (Grant No. PRIDE17/12251371).

Available on ORBilu :

since 19 October 2024

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