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Manufacturing background CEOs and corporate cost management: evidence from listed manufacturing firms

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  • Guochao Yang
  • Yize Hu

Abstract

Manufacturing is fundamental to the real economy. Given the central role of cost management in the manufacturing industry, we study the role of people in firms’ cost management. We find that manufacturing background CEOs significantly decrease cost stickiness. The results can be explained by a manufacturing background CEO’s focus on corporate cost management and his superior ability to choose flexible production to accelerate inventory flow and mitigate the bullwhip effect. We also show that the impact of manufacturing background CEOs on cost stickiness is more prominent in firms with high demand uncertainty, high economic policy uncertainty, high asset intensity, or low customer concentration. Finally, we report evidence that CEOs with manufacturing and finance backgrounds are associated with less cost stickiness, thus confirming the critical role of business-finance integration in cost management. In sum, these findings highlight the importance of talents in building a powerful manufacturing country.

Suggested Citation

  • Guochao Yang & Yize Hu, 2022. "Manufacturing background CEOs and corporate cost management: evidence from listed manufacturing firms," China Journal of Accounting Studies, Taylor & Francis Journals, vol. 10(2), pages 274-300, April.
    • Handle: RePEc:taf:rcjaxx:v:10:y:2022:i:2:p:274-300
    DOI: 10.1080/21697213.2022.2105676
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