Cost stickiness in the digital age: unveiling the influence of corporate digital transformation and top managers’ characteristics

Purpose – This study explores the impact of corporate digital transformation on cost stickiness and examines how the characteristics of top managers influence this relationship. Design/methodology/approach – The study focuses on A-share listed companies in China, using data from the WIND and CSMAR databases spanning from 2010 to 2021. A Web Crawler, developed in Python, was employed to extract information on digital transformation from the “Management Discussion and Analysis” (MD&A) sections of the annual reports. The final dataset comprises 17, 691 observations. Findings – The results indicate that digital transformation reduces cost stickiness, with the IT backgrounds and managerial ability of top managers reinforcing this effect. In contrast, political connections and managerial overconfidence diminish the negative association. The mechanism analysis reveals that the effect is mediated by light-asset operation, agency costs and information asymmetry. The impact of top managers’ IT backgrounds is particularly significant in firms with high managerial ability, whereas the moderating role of political connections is more pronounced in firms with high managerial overconfidence. Originality/value – This paper advances the understanding of corporate digital transformation and its economic implications by highlighting the moderating role of top managers’ characteristics. It provides practical insights for companies aiming to enhance their entities through digital transformation and improve cost management strategies.