Peking University, Nov. 15, 2012: Lately, Professor Chen Lei, from PKU Guanghua School of Management, and his collaborators made research progress on the effects of employment protection legislation on asymmetric cost behavior (often known as “cost stickness”), which  has been accepted for publication in the Journal of Accounting and Economics, one of the top academic journals in the world.

Entitled “Employment protection legislation, adjustment costs, and cross-country differences in cost behavior”, the paper investigates, both theoretically and empirically, how adjustment costs affect managerial decision-making related to ramping up or scaling down labor resources in business enterprises, which was elaborated in the prior literature as an important factor influencing cost behavior.

Professor Chen and his colleagues, Professors Rajiv Banker and Dmitry Byzolov from Temple University of the U.S., used data on employment protection legislation (EPL) reported by the Organization for Economic Cooperation and Development (OECD) and conducted a series of empirical tests based on over 15,000 firms in 19 countries from 1990-2008. They found that cost stickiness is significantly associated with the strictness of EPL in different countries. For instance, countries with stricter employment protection legislation, such as Portugal and France, saw firms operate with greater stickiness with regards to operational costs.

The publication is an acknowledgment of its significant contribution to a better understanding of economic factors impacting cost management and cost behavior for both scholars and practitioners.

Read more: http://www.gsm.pku.edu.cn/faculty/en/chentl.html

Edited  by: Zhang Jiang
Source: Guanghua School of Management