Agency Costs, Ownership Structure, and Cost Stickiness: Implications for Sustainable Corporate Governance

In the modern corporation, understanding sustainable cost management practices is essential for promoting economic resilience and resource efficiency. This research investigates how ownership structures influence the asymmetric behavior of selling, general, and administrative (SG&A) expenses within South Korean companies, with particular attention to Chaebols. Drawing upon agency theory and corporate governance perspectives, we examine how agency costs, proxied by free cash flow, asset utilization ratios, and operating expense ratios, interact with ownership concentration to affect SG&A cost asymmetry. Our findings show that conglomerates with concentrated ownership demonstrate significantly lower SG&A cost stickiness, suggesting improved financial discipline and more sustainable resource allocation practices. Conversely, firms with dispersed ownership structures exhibit higher cost asymmetry, suggesting governance challenges that may undermine operational flexibility and long-term sustainability. These results evince the critical role of governance structures in supporting sustainable corporate behavior. Our study contributes to the growing literature on sustainable financial management by offering new empirical insights from a unique governance context. Policy recommendations include promoting internal control mechanisms, encouraging transparent cost management practices, and strengthening shareholder engagement to drive corporate sustainability.