Effect of Deviation between Control Rights and Cash Flow Rights on Sticky Costs

Abstract

This paper takes Taiwan listed companies from 1998 to 2017 as its research object and examines the degree to which cost stickiness is impacted by differences in the degree of deviation of the control rights and cash flow rights of controlling shareholders The empirical results show that Taiwan companies have a cost stickiness phenomenon: the greater the deviation between the control rights and cash flow rights of the company's controlling shareholders the more incentives and capabilities arise to encourage shareholders to establish an empire for personal gain resulting in a higher degree of cost stickiness Through further tests it is seen that when a company's institutional investors shareholding ratio is low a positive relationship between the degree of deviation between control rights and cash flow rights on sticky cost is more obvious Cost-stricken behavior induced as a result of agency problems will be mitigated by the enhancement of external supervision mechanisms

Date of Award	2019
Original language	English
Supervisor	Ting-Kai Chou (Supervisor)