The Relationship Between Independent Director and The Stickness Of SG&A Costs

• Main Authors: Chia-Lun Hsieh, 謝佳倫
• Other Authors: Chih-Yang Tseng
• Format: Others
• Language: zh-TW
• Published: 2014
• Online Access: http://ndltd.ncl.edu.tw/handle/56016258102226943888

碩士 === 國立臺灣大學 === 會計學研究所 === 103 === Prior studies have documented the stickness of SG&A costs and that earnings target effectively push managers to expedite downward adjustment of SG$A costs which in turn diminish the stickness of SG&A costs. Other prior studies have found that effective corporate governance could keep managers from not moderately executing downward adjustment of SG&A costs which in turn diminish the stickness of SG&A costs. This paper argues that independent director, with independence and expertise could effectively restrain managers from making inappropriate SG&A expenditure downward adjustment decisions for earnings target when sales decline and in turn diminish the earnings target’s impact on the stickness of SG&A costs. Using firm-year data for about 1,000 firms listed in TWSE and GTSM over the period 2006-2012, we find that earnings target indeed push managers more aggressively cut SG&A costs and in turn diminish the stickness of SG&A costs. Moreover, we couldn’t find any empirical evidence in support of that independent director effectively restrain managers from aggressively cutting SG&A costs when sales decline. Independent director strengthen the impact of earnings target on the stickness of SG&A costs. We also find that companies with higher percentage of independent director in board of directors couldn’t effectively restrain managers from aggressively cutting SG&A costs when sales decline and couldn’t diminish the impact of earnings target on the stickness of SG&A costs.