Stakeholder orientation and cost stickiness: Evidence from a natural experiment

Tongxia Li and Chun Lu

Finance Research Letters, 2022, vol. 47, issue PA

Abstract: Using the enactment of state-level constituency statutes that allow firms to consider nonshareholding stakeholders’ interests when making business decisions as a quasi-natural experiment, we study how stakeholder orientation affects asymmetric cost behavior. We employ a difference-in-differences research design and find that the enactment of constituency statutes leads to a significant increase in the degree of operating cost stickiness. We further show that this effect is mainly driven by resource adjustment costs.

Keywords: Stakeholder orientation; Constituency statutes; Cost stickiness; Adjustment costs (search for similar items in EconPapers)
JEL-codes: D22 D24 G38 M41 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:47:y:2022:i:pa:s1544612321005560

DOI: 10.1016/j.frl.2021.102618

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