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Stakeholder orientation and cost stickiness

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  • Xin, Xianyang
  • Wong, Jin Boon
  • Hasan, Mostafa Monzur

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.

Suggested Citation

  • Xin, Xianyang & Wong, Jin Boon & Hasan, Mostafa Monzur, 2021. "Stakeholder orientation and cost stickiness," Journal of Behavioral and Experimental Finance, Elsevier, vol. 32(C).
    • Handle: RePEc:eee:beexfi:v:32:y:2021:i:c:s2214635021001362
    DOI: 10.1016/j.jbef.2021.100592
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    Cited by:

    1. Sun, Yu & Gong, Hui, 2023. "Firm financialization and cost stickness behavior," Finance Research Letters, Elsevier, vol. 57(C).
    2. Qin Zhang & Jin Boon Wong, 2023. "The influence of oil price uncertainty on stock liquidity," Journal of Futures Markets, John Wiley & Sons, Ltd., vol. 43(2), pages 141-167, February.
    3. Costa, Mabel D’ & Opare, Solomon, 2022. "Cost asymmetry around seasoned equity offerings," Journal of Behavioral and Experimental Finance, Elsevier, vol. 34(C).
    4. Xinyi Du & Kangqi Jiang & Xian Zheng, 2024. "Reducing asymmetric cost behaviors: Evidence from digital innovation," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-18, December.
    5. Kim, Jonghwan (Simon) & Ra, Kyeongheum, 2022. "Employee satisfaction and asymmetric cost behavior: Evidence from Glassdoor," Economics Letters, Elsevier, vol. 219(C).
    6. Zhang, Qin & Wong, Jin Boon, 2022. "ESG reputational risks and board monitoring committees," Finance Research Letters, Elsevier, vol. 50(C).

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    More about this item

    Keywords

    Stakeholder orientation; Cost stickiness; Adjustment cost; Agency problem;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation

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