Chairmen's Early-life Experience Of The Great Chinese Famine And Cost Stickiness Preference

Cost stickiness refers to the phenomenon that the degree of cost decline when income declines is smaller than the degree of cost increase when income rises.The explanations include adjustment cost,managers'optimistic expectation and agency problem.According the studies,cost stickiness is related to the external environment,corporate characteristics,governance structures and executives' decisions.The existing research on the relationship between executives and cost stickiness focuses on the executive tenure,salary,gender,education and other factors,while the influence of growth experience of executives is lack of discussion.Based on imprinting theory,the individual's experience during his/her sensitive period will have profound impact on his/her cognitive beliefs and behavioral preference in the future.Researchers have found that the early-life experience will affect the individual's saving behavior,investing and financing preference,retirement decisions and so on.We took the great Chinese famine into consideration,and the manufacturing listed companies from 2001 to 2015 are sampled to explore the impact of the chairmen's early-life experience of the great Chinese famine on cost stickiness preference.We find that:(1)the chairman who experienced the great Chinese famine in the stage of adolescence prefers to restrain cost stickiness;(2)The weakening effect of chairmen's famine experience on cost stickiness will be weaken in state-owned enterprises;(3)among the companies with high concentration of equity,the chairmen that experienced the great famine in the early stage of growth has more significant performance in suppressing cost stickiness.