부정청탁금지법이 원가의 하방경직성에 미치는 영향

Cost is the monetary value of resources consumed for business operations. Therefore, cost behavior depends on the business decision about how to allocate resources. While laws and regulations have a significant impact on management's resource allocation decision, this paper examines how the improper solicitation and graft act implemented in 2016 affect cost behavior, specifically sticky cost behavior.
Companies having stronger connections with the government enjoy more economic benefits from the government in various ways. For that, companies attempt to have a good relationship with individuals or organizations that are connected to the government. Through such connections, companies expect, for example, to have more government procurement contracts, which consequently helps them to break through challenging business situations.
Korean companies had built connections with the government, mainly focusing on providing prerequisite to government officials, politicians, and journalists who are likely to have connections with the government. However, since the Improper Solicitation and Graft Act became effective in 2016, the provision of prerequisites to the individuals mentioned above has been illegal. Thus, after the passage of the Improper Solicitation and Graft Act, management is less likely to expect that, in the next period, they can quickly recover from the current demand decline because they cannot expect support from the government. It likely induces companies to quickly remove resources in response to the sales decline, which consequently results in less stickiness of costs.
The empirical analysis provides evidence consistent with our prediction: cost stickiness becomes less after the passage of the Improper Solicitation and Graft Act. Even though the Act became effective in 2016, researchers have not paid attention to the impact of this new regulation on the management's resource allocation decision. This study contributes to prior literature of cost behavior, in that it examines the effects of this new regulation, i.e., the improper solicitation and graft act, on the decision-making of corporate resource coordination.