Stakeholder orientation and cost stickiness

Xianyang Xin, Jin Boon Wong and Mostafa Monzur Hasan

Journal of Behavioral and Experimental Finance, 2021, vol. 32, issue C

Abstract: We examine the relationship between stakeholder orientation and cost stickiness (i.e., managerial asymmetric resource allocation decisions in response to firms’ activities change). Using the staggered adoption of the U.S. non-shareholder constituency statutes as a proxy for stakeholder orientation, we find strong empirical evidence of a positive relationship between stakeholder orientation and asymmetrical cost behavior. We further show that stakeholder-orientated managers retain slack resources when firms’ activity declines because of agency problems. Our results are robust to alternative model specifications, related sub-sample analysis and various measures of costs.

Keywords: Stakeholder orientation; Cost stickiness; Adjustment cost; Agency problem (search for similar items in EconPapers)
JEL-codes: G32 G34 M41 M48 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:beexfi:v:32:y:2021:i:c:s2214635021001362

DOI: 10.1016/j.jbef.2021.100592

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