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The impact of fiscal expenditure fluctuation on cost asymmetry: Evidence from China

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  • Jingwen Liao
  • Hao Yang
  • Ziyang Li
  • Yanjun Chen

Abstract

This study investigates the relationship between district government fiscal expenditure fluctuation and asymmetric cost behaviour in China. Using the unique manual data sets of Chinese A‐listed firms during the period 2003–2018, we find that cost stickiness is a pervasive phenomenon and that fiscal expenditure fluctuation positively affects cost stickiness. The results also demonstrate this effect is more pronounced when labour input is high and the size of the population is large. In addition, our further analysis indicates that higher social welfare incomes and the higher administrative level of a city can influence these results.

Suggested Citation

  • Jingwen Liao & Hao Yang & Ziyang Li & Yanjun Chen, 2025. "The impact of fiscal expenditure fluctuation on cost asymmetry: Evidence from China," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 65(1), pages 551-579, March.
    • Handle: RePEc:bla:acctfi:v:65:y:2025:i:1:p:551-579
    DOI: 10.1111/acfi.13340
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