Managers’ Personal Characteristics, Bank Supervision, and Cost Stickiness *

Managers are important human capital of firms and their personal characteristics can have direct and significant effects on firms’ decision behaviour and value creation. This paper explores this issue from the perspective of cost stickiness, using data from manufacturing firms listed on the Shanghai and Shenzhen Stock Exchanges of China over the period 1999 to 2011. The results are the following. (1) The gender and age of a chairperson can significantly affect a firm’s cost stickiness. Firms with a male chairperson or a young chairperson tend to have higher cost stickiness. However, the chairperson’s tenure does not significantly affect cost stickiness. (2) The degree of bank supervision may influence the relationship between gender/age and cost stickiness. When the degree of bank supervision is high, a chairperson’s personal characteristics do not significantly affect a firm’s cost stickiness. (3) The impact of a chairperson’s personal characteristics and bank supervision on a firm’s cost stickiness is reflected mainly in non-labour costs. Further tests show that long-term and short-term bank loans, as well as bank loans for state-owned and non-state-owned listed firms, have good supervision effects. Overall, these results show that managers’ personal characteristics and bank supervision have an important impact on their firms’ cost behaviour.