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Does asymmetric cost behavior increase regulatory inquiries?

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  • Liu, Yapan

Abstract

This study uses data from Chinese A-share listed firms between 2014 and 2023 to examine the association between corporate asymmetric cost behavior and regulatory inquiries. The results indicate that firms with higher asymmetric cost behavior are more likely to receive financial report inquiry letters. Mechanism analysis shows that greater cost asymmetry is associated with lower financial reporting reliability and comparability and a higher probability of receiving regulatory inquiries. Further analyses reveal that firms exhibiting anti-cost stickiness, those listed on the Shenzhen Stock Exchange, and firms with lower audit quality have a higher likelihood of receiving regulatory inquiries.

Suggested Citation

  • Liu, Yapan, 2026. "Does asymmetric cost behavior increase regulatory inquiries?," Finance Research Letters, Elsevier, vol. 95(C).
    • Handle: RePEc:eee:finlet:v:95:y:2026:i:c:s1544612326002175
    DOI: 10.1016/j.frl.2026.109686
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    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation

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