CEO Pension and Selling, General and Administrative Cost Stickiness

Kyoungwon Mo, Kyung Jin Park and Kim YoungJin
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Kyoungwon Mo: Chung-Ang University, Postal: Chung-Ang University
Kyung Jin Park: Myongji University, Postal: Myongji University
Kim YoungJin: Korea Advanced Institute of Science and Technology, Postal: Korea Advanced Institute of Science and Technology

International Journal of Entrepreneurship, 2018, vol. 22, issue 4

Abstract: Using CEO pension as inside debt, we show how inside debt affects cost stickiness. Inside debt was recently recognized as debt-based compensation that increases managers’ risk aversion. More risk adverse managers will reduce cost stickiness if it suits their self-interest. We empirically find that inside debt decreases cost stickiness, which implies that cost stickiness is mainly driven by overconfident CEOs’ intentions to benefit them. Our results show that inside debt can mitigate the agency problem in cost stickiness.

Keywords: CEO Pension; Cost stickiness; Agency problem; Inside Debt. (search for similar items in EconPapers)
JEL-codes: M21 (search for similar items in EconPapers)
Date: 2018
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