The Influence Of Board Governance On Expense Stickiness Based On Free Cash Flow Theory

In the long-term development, Management Accounting takes the traditional Cost Behavior Theory as its basic theory, which assumes a strict linear relationship between cost and business volume, but a large number of studies have found that in different directions of the marginal expense or cost change rate between the activity increased and decreased are asymmetry, so it appeared expense or cost stickiness. According to opportunism perspective, managerial self-interest behavior by expense occupation lead to enterprise expense stickiness, and free cash flow is an important stimulation to managers’ self-interest behaviors, at the same time the board governance has depress influence on managers’ self-interest. Based on this, this article writes mentality for the direct stimulus to expense stickiness and the influence of board governance on expense stickiness.This paper adopts the combination of theoretical and empirical research methods. Through reviewing and teasing foreign and domestic relevant studies of expense stickiness, and analysing related theoretical, this paper putted forward 8 hypotheses, chosed the manufacturing listed companies from 2010 to 2013 as the research obj ect, integrated regression analysis and comparative analysis to carry on the analysis. The results showed that, now manufacturing listied corporations after the 2008 financial crisis still behave sticky, and there is a positive association between free cash flow and the degree of expense stickiness. In addition, when abundant free cash flow exists, the larger scale of the board of directors, "dual structure" leadership, the financial or law professional background of the independent directors, the higher the number of board meeting and so on, play a more significant reduction effectiveness on expense stickiness. According to the consequence, this paper puts forward some proper suggestions to solve the issues from improving board governance and making scientific decisions on free cash flow. This study is aimed to have a contribute to the research of expense stickiness, as well as enhancing the daily expense management of listed companies in China.