Board Informal Hierarchy,Independent Director Network And Cost Stickiness

Reducing costs has become the key to improving economic profits and maintaining competitive advantages.The high cost stickiness to some extent reflects the low internal governance capacity of listed companies.As a supervisory and decision-making body,the board of directors has an unshirkable responsibility for cost management.As a Group decision-making body composed of different directors,the informal level of the board of directors formed based on social capital differences among members will also have an impact on enterprise management.The informal level of the board of directors plays the role of resources,supervision and consultation,solves the problem of cost stickiness caused by cost adjustment,Principal–agent problem and managers’ optimistic expectations,and optimizes managers’ cost decisions.At the same time,the social relationship network of independent directors will also affect the overall role of the board of directors,thereby reducing cost stickiness in the enterprise.Therefore,this article integrates the informal hierarchy of the board of directors,the network of independent directors,and the cost stickiness of enterprises into an analytical framework for research,in order to provide reference and guidance for reducing the cost stickiness of enterprises.At the same time,it also has important practical significance for selecting board members.After using literature research methods to sort out domestic and foreign literature,combined with cost stickiness driver theory,relational contract theory,resource dependence theory,weak joint advantage theory,and reputation incentive theory,the relationship between informal hierarchy of the board of directors and enterprise cost stickiness,as well as the regulatory role of independent director networks,is analyzed using inductive deduction method.Research hypotheses are proposed one by one to further explore the specific assets to different degrees The impact path of informal board hierarchy on cost stickiness of enterprises under the grouping influence of free cash flow and industry prosperity;After constructing the model,we selected the data of A-share listed companies in Shanghai and Shenzhen in China from 2011-2021 to conduct regression analysis,and reached the following conclusions: there is a significant negative correlation between the informal hierarchy of the board of directors and enterprise cost stickiness,that is,the higher the clarity of the informal hierarchy of the board of directors,the more positive it can play,and the lower the level of enterprise cost stickiness;The network of independent directors has a positive moderating effect on the impact of informal hierarchy of the board of directors and cost stickiness of the enterprise.Specifically,when the centrality of the network of independent directors is high,it will play a positive role in the social network and strengthen the inhibitory effect of informal hierarchy of the board of directors on cost stickiness of the enterprise;Under the grouping of enterprises with more specialized assets,more free cash flow and a high degree of industry prosperity,the informal level of the board of directors can play the role of resources,supervision and consultation to alleviate the cost stickiness caused by adjustment costs,Principal–agent problem and managers’ optimistic expectations;In further expansion analysis,compared to the formal level of the board of directors,the informal level of the board of directors can significantly suppress the cost stickiness of listed companies.Based on the theoretical analysis and empirical testing in the previous text,targeted countermeasures and suggestions are proposed to reduce the stickiness of enterprise costs by standardizing informal hierarchical governance of the board of directors,improving the construction of independent director teams,and strengthening cost management and control.Unlike previous studies,this article starts from the perspective of the informal hierarchy of the board of directors and uses the network of independent directors as a moderating factor,which has played a positive role in alleviating the cost stickiness of listed companies and has a certain degree of innovation.However,due to limited academic level,the specific impact mechanism of its role still needs further research by scholars in the future.