The Effect of CEO–Chairperson Joint Tenure on the Stickiness of Selling, General, and Administrative Costs

Document Type : Research Paper

Authors

1 Associate Prof., Department of Accounting and Auditing, Faculty of Accounting and Finance, College of Management, University of Tehran, Tehran, Iran.

2 MSc. Student, Department of Accounting, Faculty of Accounting and Finance, College of Management, University of Tehran, Tehran, Iran.

3 Ph.D. Candidate, Department of Accounting, Faculty of Accounting and Finance, College of Management, University of Tehran, Tehran, Iran.

10.22059/acctgrev.2026.406452.1009188

Abstract

Objective
The purpose of this study is to examine the effect of the collaborative tenure between the Chief Executive Officer (CEO) and the Chair of the Board on the stickiness of Selling, General, and Administrative (SG&A) costs. Such costs constitute one of the most important components of firms’ operating costs and are characterized by a high degree of managerial discretion and flexibility. Decisions regarding the adjustment or retention of these costs, particularly during periods of sales decline, play a critical role in firms’ cost performance. Cost stickiness may reduce firms’ cost flexibility when facing sales fluctuations. While prior studies have investigated various determinants of asymmetric cost behavior, the accounting and corporate governance literature provides limited evidence regarding the role of long-term interaction and collaboration among key governance actors in shaping such behavior. Accordingly, by focusing on the joint tenure of the CEO and the Board Chair as a relatively underexplored internal corporate governance mechanism, this study seeks to fill this gap and provide empirical evidence on the impact of interactive governance dimensions on firms’ operating cost management.
Methods
This study is applied in nature and employs a quantitative, descriptive–correlational research design. Retrospective data are used, and hypotheses are tested using multivariate regression analysis based on pooled panel data. The sample consists of 153 non-financial firms listed on the Tehran Stock Exchange over the period 2016–2023, selected through a screening process from an initial population of 386 listed firms. Data were collected from the CODAL database, prepared using Microsoft Excel, and analyzed using EViews software. SG&A cost stickiness is measured based on logarithmic changes in revenues and costs. The main independent variable is the number of consecutive years of collaboration between the CEO and the Board Chair. Employee intensity, asset intensity, and consecutive sales decline are included as control variables. After testing classical regression assumptions, including normality, serial autocorrelation, and heteroskedasticity of residuals, EGLS estimation was employed.
Results
The findings indicate that SG&A costs decrease more than expected during periods of sales decline, providing evidence of anti-stickiness behavior. Moreover, the joint tenure of the CEO and the Board Chair has a statistically significant effect on the intensity of this behavior. The interaction coefficient between changes in sales revenue, the sales-decline indicator, and joint tenure is positive and significant, suggesting that longer periods of collaboration increase the sensitivity of SG&A costs to sales declines. This result implies that in firms with longer CEO–Chair collaboration tenures, cost adjustments in response to declining sales are more pronounced—a pattern that may reflect changes in cost decision-making processes and managers’ response horizons under unfavorable sales conditions.
Conclusion
The results suggest that the tenure of collaboration between the CEO and the Board Chair is associated with the way SG&A costs respond to sales declines and can influence the sensitivity of cost adjustment decisions. Although greater cost sensitivity may be accompanied by faster cost reductions during adverse sales conditions, such behavior does not necessarily imply higher cost efficiency and may also reflect short-term managerial orientations, performance pressures, or earnings management considerations. Accordingly, the findings highlight the importance for regulators and corporate governance policymakers to consider the behavioral implications of managerial collaboration tenures and to evaluate them alongside other governance mechanisms and qualitative indicators of managerial decision-making. Overall, this study contributes to the literature on cost stickiness and the role of corporate governance factors in shaping cost behavior.

Keywords

Main Subjects

References

 
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Accounting and Auditing Review
Volume 33, Issue 2
2026
Pages 242-272

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