Research On The Influence Of Co-opted Boards On Enterprise Expenses Stickiness

The independence of the board directors and its supervisory effectiveness have always been the focus of attention in the theoretical and practical circles.However,there are still disputes about its impact on corporate decision-making.An important reason may be that the relationship between executives and directors is ignored.Because the CEO has a significant influence on the selection of board members,this article builds a reverse index based on the appointment connectedness to measure the effectiveness of the board of directors.Cost as the core of enterprise management,in the context of Chinese economic transformation,the management and control of corporate expenses have important practical significance.Therefore,this article empirically studies the impact of CEOdirector coalition on the stickiness of corporate expenses,in order to verify the significance of the board directors on cost decision-making,and provide empirical support for the management and control of corporate expenses.This paper comprehensively uses the research methods of theoretical research and empirical analysis.First,it systematically combs the relevant literature on co-opted boards and expense stickiness at home and abroad,looking for research gaps and research blank areas.Then,based on theoretical foundations,we make assumptions about the relationship between CEO-director coalition and the stickiness of corporate expenses,and consider the possible moderating effects of internal control quality and regional trust levels,and use the data of Shanghai and Shenzhen A-share listed companies from 2011 to 2019 to conduct empirical tests subsequently.Finally,study the coalition between CEO and independent directors separately,empirically analyze the impact path and internal mechanism of the CEO-director coalition on corporate expense stickiness,and conduct further research in groups according to analyst attention.The empirical results show that:(1)In A-share listed companies of China,the phenomenon of expense stickiness is common,and the CEO-director coalition is positively correlated with corporate expense stickiness.Further analysis shows that the CEO-independent director coalition will also increase corporate expense stickiness;(2)The quality of internal control has a negative moderating effect,that is,compared with companies with high internal control quality,the CEO-director coalition has a more significant effect on the stickiness of corporate expenses in companies with low internal control quality;(3)The level of regional trust has a positive moderating effect,namely compared with companies in regions with low trust levels,the CEO-director coalition has a more significant effect on the stickiness of corporate expenses in regions with high trust levels;(4)The CEO-director coalition mainly affects expense stickiness by increasing agency costs,rather than raising management’s optimistic expectations;(5)The effect of CEO-director coalition on expense stickiness is only significant in the low analyst attention group,indicating that the external governance mechanism of analyst attention can restrain the impact of CEO-director coalition on expense stickiness.The research conclusions of this paper enrich the research on the impact of CEO-board association on the stickiness of corporate expenses,and further expand the research on the economic consequences of cooption.On the basis of considering the quality of internal control and the trust level of external regions,this article puts forward suggestions from the perspective of enterprises,governments and regulatory agencies,hoping to help improve the corporate governance system and improve the external environment.