Study On The Board Governance And Cost Stickiness In The Perspective Of Managerial Overconfidence

In recent years, scholars have found that traditional cost theory can no longer explain the phenomenon of asymmetry of cost and sales. Cost stickiness means that costs increase more with sales increase than they decrease in response to equivalent sales decrease. At present, most studies on the cost stickiness is based on opportunism theory originated from the separation of two rights. But research on whether managerial overconfidence is another reason for cost stickiness is much less. The literature research shows that the board governance efficiency can directly influence the success or failure of the company. The board can effect management self-interest behavior. So whether the board can affect the managerial overconfidence. Exploring the influence of board governance on cost stickiness can not only enrich research on cost stickiness and board governance, but also improve the importance of perfect board governance to the business development of the company.Firstly, this paper reviews the relevant literature on the relationship among the managerial overconfidence, board governance and cost stickiness, defines concepts of cost stickiness, managerial overconfidence and board governance, and introduces agency theory, overconfidence theory, resource dependence theory and medium theory. Then, this paper puts forward the hypothesis, constructs the mediating effects model, discusses and investigates the board governance playing role on the cost stickiness from the perspective of managerial overconfidence using the data of China A-share manufacturing listed companies from 2011 to 2014. The empirical evidence shows that managerial overconfidence will improve the degree of cost stickiness. Moreover, on the one hand board governance has a direct effect on reducing the degree of cost stickiness, on the other hand board governance can reduce the degree of cost stickiness by constraining managerial overconfidence. In other words, managerial overconfidence has partial mediating effect on the relationship of board governance and cost stickiness.Finally, based on theoretical and empirical analysis, the paper proposes some suggestions about improving the structure of the board governance, strengthening the construction of economic market.