Ownership Structure and the Dynamics of Cost Adjustment : A Comparison of Listed and Unlisted Firms in Sales-Decline Phases

Using a large panel (2001–2021) of Japanese listed and unlisted firms from Teikoku Databank, Ltd., we examine how ownership structure shapes cost adjustment in general operating firms—outside the capital-adequacy regulation that constrains the banking setting of prior work. We find that listed firms maintain more elastic cost structures than unlisted firms (Hypothesis 1). Their ex post adjustment, however, is state-dependent. In temporary sales declines (a prior-period increase followed by a current-period decrease), listed firms exhibit stronger cost stickiness and suppress cost reductions (Hypothesis 2a); under persistent declines spanning two consecutive periods, they instead cut costs more aggressively than unlisted firms (Hypothesis 2b). Ownership thus conditions a state-dependent, nonlinear pattern in which market discipline switches between resource retention and reduction according to the persistence of the demand decline. The results are robust to Heckman self-selection correction and to propensity-score matching, inverse-probability weighting, and entropy balancing.