Management expectations and operating cost responses to COVID-19: a study of Chinese listed enterprises

This study examines the impact of COVID-19 on operating cost stickiness in Chinese firms, utilising fixed-effects regression analysis of A-share listed companies from 2012 to 2021. The findings reveal that the pandemic significantly reduced cost stickiness across these firms. Heterogeneity analysis indicates a pronounced decrease in cost stickiness among non-state-owned enterprises (non-SOEs), in contrast to a more modest decline in state-owned enterprises (SOEs). The manufacturing sector experienced a more substantial reduction in cost stickiness than the non-manufacturing sector. Additionally, the analysis suggests that the pandemic heightened managerial pessimism in both SOEs and non-SOEs; however, this sentiment notably influenced cost stickiness only in non-SOEs. Overall, the management expectations theory elucidates the significant reduction in cost stickiness in non-SOEs, while the political connection theory accounts for the relatively limited impact observed in SOEs.